Education Department ordered to forgive student loans for over 170K borrowers defrauded by schools

The Education Department will be required to wipe out student loan debt for another approximately 170,000 borrowers after a federal appeals court recently declined to give the federal government more time to review the claims.

The case is tied to student loan borrowers who claimed they were defrauded by their respective for-profit schools. The Biden administration settled the case in 2022, but it required the government to keep reviewing fraud claims from borrowers who filed their case after the deal was announced and set a deadline of early 2026.

The settlement also stated that if the Education Department had not adjudicated the additional claims by early 2026, they were to be automatically approved. 

The initial case forgave the student loan debts for 300,000 borrowers, but the case has since expanded to nearly 500,000 borrowers and the total debt cleared will equal $23 billion. The newer plaintiffs' debt equals $11 billion.

The latest ruling, issued unanimously by a panel on the Ninth Circuit Court of Appeals last month, came after the Trump administration asked for an additional 18 months to review the newest claims. 

Education Department spokesperson Ellen Keast told the New York Times on Monday that the settlement “imposed an unrealistic deadline” on the department.

"The Department has complied in good faith with court orders and we believe the court erred in not granting our reasonable request," she added.

The Biden administration forgave a total of $34 billion in student loan debt for borrowers whose schools took advantage of them, have since closed, or are part of court settlements, according to the previous administration.

Misty Severi is a news reporter for Just The News. You can follow her on X for more coverage.