WASHINGTON, (Reuters) – The U.S. Supreme Court yesterday refused to halt a legal settlement that would erase more than $6 billion in debt owed by former students of colleges – many of them for-profit institutions – who have said they were misled by schools about academics and job prospects.
The justices turned away a request from three colleges that are challenging a settlement between the U.S. Education Department and borrowers that linked the colleges to claims of “substantial misconduct,” an allegation they dispute.
Three of the schools identified in the settlement – for-profit Lincoln Education-al Services Corp LINC.O and American National University Inc as well as nonprofit Everglades College Inc – challenged the agreement after it was approved by a federal judge in California last November. Around 3,500 borrowers entitled to automatic loan discharge under the settlement attended one of the three schools.
The decision was separate from a case pending before the high court over the legality of President Joe Biden’s plan to cancel $430 billion in student debt for about 40 million borrowers. A ruling in that case is expected by the end of June.
The latest dispute stemmed from a class-action settlement under which the Education Department would automatically cancel the debt of nearly 200,000 borrowers who attended 151 schools.
