Department Of Education Is Currently Cancelling Debts For Borrower Defense To Repayment

On Wednesday November 16th, 2022 the United States District Court For The Northern District Of California approved a settlement for an ongoing lawsuit filed against the Department of Education by plaintiffs who were denied student loan discharges under Borrower Defense To Repayment. The lawsuit was originally Theresa Sweet et. al v. Betsy DeVos but later changed to Theresa Sweet et al. v. Miguel Cardona after the Secretary of Education changed in January 2021. United States District Judge William Alsup granted the final approval for the settlement which instructs the Department of Education to immediately discharge the student loan balances for approximately 200,000 student loan borrowers who attended certain colleges. An update on the status of the discharged debt is due to the court by January 26, 2023. Therefore it is likely that the Department of Education will try to have all of this debt discharged by that January 2023 deadline.

What does this mean for Hope Credit borrowers?

Starting Friday November 18th, 2022, many Hope Credit clients began receiving email notifications from the Department of Education that their loans were scheduled for discharge. Several clients reported seeing a $0.00 balance in their accounts, indicating that the discharges were actually taking place without delay. If you attended a fraudulent or closed college and took out student loans, those student loans will be discharged. However student loans for legitimate colleges will remain with the borrower. As a result, some borrowers will only see a portion of their student loans discharged, as the driving factor is the college that was attended, not the borrower. Borrowers who took out loans to only attend one college that was later included in the settlement will have all of their student loans forgiven.

Borrowers should not have to take any action to receive the discharge. An email entitled ‘Student Loan Discharge Based on Borrower Defense Evidence’ should explain the discharge you will receive and the college that the discharge was based on. Borrowers may also receive a refund for payments made toward those loans in the past.

The final settlement and list of colleges has been provided below in PDF format. Some smartphone browsers may not be able to display these files but should be available to download. If you find a college that you took out federal student loans to attend on that list, this is an indication that you should have already received an email notice of discharge or should expect to receive one before January 26, 2023.