A federal judge just ruled $6 billion in student-debt cancellation can move forward for 200,000 defrauded borrowers, saying the decision will 'allow them to not only to move on, but also to move up, elevating others in the process'

• A federal judge ruled that $6 billion in student-debt relief for 200,000 borrowers can move forward.
• It's a result of a settlement — Sweet v. Cardona — first filed under then-President Trump in 2019.

Thousands of student-loan borrowers are finally moving forward with long-awaited debt relief.

On Friday evening, federal Judge William Alsup ruled that a settlement he had already approved last year resulting from a lawsuit — Sweet v. Cardona — can move forward, which would give 200,000 borrowers defrauded by the schools they attended $6 billion in debt relief.

This relief has been a long time coming. The lawsuit was first filed in 2019, when the plaintiffs accused former President Donald Trump's Education Department of failing to process their borrower defense claims, which are claims borrowers can file if they believe they were defrauded by their school. Since the lawsuit wasn't resolved under Trump, President Joe Biden took it on and agreed to a settlement to give borrowers relief.

However, two for-profit companies — Lincoln Educational Services Corp. and American National University — and Everglades College, Inc., a nonprofit, filed notices to appeal Alsup's decision in January and pause the relief because they argued they did not have sufficient time to push back against being included in the settlement. Alsup rejected their request on Friday.

"The settlement breaks a logjam that has vexed several Secretaries and allows the Department to redirect resources to other initiatives. And it gives plaintiffs, who have languished in borrower-defense application limbo, their long-awaited relief," Alsup wrote in his decision.

"Note the relief provided by this settlement (financial and otherwise) will allow plaintiffs to breathe easier, sleep easier, repair their credit scores, take new jobs, enroll in new educational programs, finish their degrees, get married, start families, provide for their children, finance houses and vehicles, and save for retirement," he continued. "It will allow them not only to move on, but also to move up, elevating others in the process."

As Alsup was reviewing whether to pause the relief, the plaintiffs in the case filed an opposition to the request, writing that borrowers would be "severely harmed" if the relief keeps getting delayed.

"They have already waited years for the resolution of their borrower defense ('BD') applications, some of which have been pending since 2015," the filing said. "The loans that would be discharged under the Settlement continue to shadow them, affecting their credit, their livelihoods, their mental health, and countless other aspects of their lives. One hundred and forty-four borrowers have submitted declarations attesting to the harm a stay would cause them."

Along with automatic relief for 200,000 borrowers, the settlement also allows for a streamlined review of another 64,000 borrower defense applications. Eileen Connor, president and director of the Project on Predatory Student Lending — the company that represented the plaintiffs — wrote in a statement that Alsup's Friday decision "delivers a massive, long-overdue victory for our clients and validates the fact that this settlement is on solid legal ground."

"Now, hundreds of thousands of people and families who have been held hostage by the borrower defense process for so long will finally receive a fair resolution and the justice they are owed," Connor said.