The Supreme Court on Thursday refused to intervene in a lawsuit settlement that could see up to $6 billion in student debt dismissed for students of certain colleges, including several “for-profit” schools.
The high court rejected the request from the schools to stop the settlement from going into effect in a brief order. The case was brought by former students of colleges who said they were misled by the schools about academics and job prospects.
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The case comes from a settlement California-based U.S. District Judge William Alsup approved in November. The Supreme Court appeal was brought by three of the universities that were placed on a list of schools that the federal government said are linked with claims of “substantial misconduct.”
There are more than 150 institutions on the list in total; the three in the settlement are the for-profit Lincoln Educational Services Corp., American National University, and nonprofit Everglades College.
Last summer, the Department of Education announced it was settling the Sweet v. Cardona lawsuit, which had sought a court order to force the department to adjudicate claims made under the Borrower Defense Loan Discharge program, which allows the department to provide loan relief for students who were defrauded by their universities.
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The government has already started implementing the settlement, which affects at least 3,800 borrowers. Approximately 400 of them have already been fixed.
The lawsuit is separate from the Biden administration’s attempt to relieve up to $20,000 in debt for millions of borrowers, which would cost taxpayers approximately $400 billion. The Supreme Court is expected to hear that case by the end of June, and a lower court has placed a hold on the plan due to questions about its legality.
