The Trump administration is looking to delay the latest round of student loan forgiveness in a borrower defense settlement
The Trump administration requested additional time Thursday to determine whether a group of about 200,000 student loan borrowers are eligible for loan forgiveness.
Under Cardona v. Sweet, the Biden administration agreed to settle student loan relief claims under Borrower Defense submitted before June 22, 2022, in three different groups over a certain timeline. The case is now known as the Sweet v. McMahon.
Borrowers applied for forgiveness using the Borrower Defense Program, which allows for student loan relief if a person is defrauded by a school. Some claims under the settlement have been pending for more than seven years.
While the first two classes received decisions on their applications according to the agreed timeline, the Department for Education is requesting an extension for the final group of approximately 200,000 borrowers who are currently expected to receive decisions on their applications at the end of January.
If a decision is not made by January 28, all borrowers will have their loans forgiven, totaling $12 billion.
“The Sweet Settlement, negotiated by the previous administration, imposes a timeline that requires the department to automatically cancel up to $12 billion in student loans by January 2026 without proper screening,” Education Undersecretary Nicholas Kent said.
He added: “Although the Department has complied with the court’s deadlines in good faith, the upcoming January deadline is unreasonable. Without adequate time to review each pending borrower defense case, taxpayers may have to endure $6 billion in surprise discharges to ineligible borrowers, based on the Department’s current dismissal patterns.” “The Trump Administration is requesting additional time to review these applications to ensure that no taxpayers are burdened with discharges for ineligible borrowers.”
The department says the timeline for the final group is unrealistic, as the third category of borrowers was much larger than originally intended when the settlement occurred. In the five months between the settlement agreement and final court approval, 251,000 claims were filed in the third group, the lawsuit said.
A senior Education Department official told The Hill that the federal agency intends to fulfill its obligations under the agreement and hire outside contractors to assist in the process, though a department official will have the final decision on the request.
So far, borrower defense applications have had a 50 percent approval rate and a 50 percent rejection rate under the administration, the official said.
The official also denied that the delay was caused by layoffs of about half of the Education Department’s staff since the beginning of Trump’s presidency, arguing that the layoffs did not affect the office handling the settlement.
“But things have changed, and given a variety of circumstances — including the unexpected size of the post-class pool, the Department’s reasonable but unforeseen resource constraints, and the new requirement in certain circumstances that the Department now discharge non-qualifying loan debt unrelated to the post-class applicant’s borrower defense application — the court must provide the Department with relief from this one aspect of the parties’ comprehensive settlement agreement that was about to expire,” the suit says.
The Department requests that the deadline for transferring the final group decisions be set to July 28, 2027.
The Department for Education says it would be unfair to rush applications and provide aid when it is not needed, which would be paid for by taxpayers.
“What would American taxpayers think if we told them we would forgive $12 billion in federal student loans, even though we didn’t actually look at the merit of the claim?” The official said.
The other two groups that received forgiveness on time had high rates of accepted applications and did not see a significant increase in the number of borrowers after the settlement was made, the official said.
The Trump administration’s desire to have more time to adjudicate tracks as it responds to other efforts by the Biden administration to provide mass student loan relief.
The department has already successfully repealed former President Biden’s income-driven repayment plan to provide valuable education, which has been called the most generous student loan plan in history.
