The case — Sweet v. Cardona, formerly Sweet v. DeVos — represented 264,000 people constituting the “current borrower defense backlog,” according to a press release from the Project on Predatory Student Lending. The group’s 2019 lawsuit contended that for-profit schools such as Corinthian Colleges and DeVry University “delivered worthless products that left students with thousands of dollars in debt, damaged credit, and depleted access to further student aid” while lying about prospects for high-paying jobs.
Education Secretary Miguel Cardona lauded the settlement, which the U.S. District Court for the Northern District of California will independently review before approval.
“Since day one, the Biden-Harris Administration has worked to address longstanding issues relating to the borrower defense process,” Cardona said in a statement about the settlement. “We are pleased to have worked with plaintiffs to reach an agreement that will deliver billions of dollars of automatic relief to approximately 200,000 borrowers and that we believe will resolve plaintiffs’ claims in a manner that is fair and equitable for all parties.”
Earlier this month, the Department of Education canceled debt from former attendees of Corinthian Colleges, which filed for bankruptcy in 2015. The move forgave $5.8 billion in debt among 560,000 borrowers.
More broadly, the Biden administration is weighing various proposals to nix student debt for citizens at large. Last month, The Washington Post reported that the White House was weighing a plan to scrap $10,000 per borrower earning up to $150,000 per year. However, several Democratic lawmakers — such as Senate Majority Leader Chuck Schumer (D-NY) and Rep. Alexandria Ocasio-Cortez (D-NY) — have repeatedly pressed Biden to cancel student loan debt of up to $50,000 per borrower.
Schumer has argued that “all President Biden has to do is flick his pen” to erase the $50,000 sum. Earlier this week, Schumer sought to dismiss the “awful myth” that student debt “concerns the wealthy or the Ivy League” rather than “working-class people.”
However, data suggest that student loan cancellation tends to benefit wealthy Americans. Almost one-third of student debt is owed by the wealthiest 20% of households, while 8% is owed by the bottom 20%, according to a paper from the Brookings Institution.
Meanwhile, Sen. Elizabeth Warren (D-MA) has characterized the student debt crisis as a “racial justice issue.”
“African-Americans borrow more money to go to school, more money while they’re in school, and have a harder time paying it off when they get out of school,” she told CNN anchor Don Lemon last year. “Canceling $50,000 of student loan debt would help close the black-white wealth gap for people with student loan debt by twenty-five points. And for Latinos, by twenty-seven points.”
Likewise, National Association for the Advancement of Colored People (NAACP) President Derrick Johnson argued last month that $10,000 in student loan cancellation is not enough for black borrowers, since black Americans “are the only people who have student debt higher than their median annual income.”
As of the first quarter of 2022, Americans owed $1.75 trillion in student loans, according to the Federal Reserve.