Chicago – January 11, 2025
The U.S. Supreme Court announced on Friday that it will review a lower court’s decision to block a rule from the Biden administration designed to forgive student loan debt for borrowers who their colleges defrauded.
This decision could have a significant impact on President Joe Biden’s legacy in addressing student loan debt, which has been a key focus of his presidency.
The Biden administration’s rule at the center of this case, known as the “borrower defense” rule, allows borrowers to request debt forgiveness if they can prove their college misled them about things like job prospects after graduation. For example, if a college falsely promised good job opportunities, borrowers can seek loan cancellation.
Although borrowers have had the ability to claim loan forgiveness for fraud in the past, the process has often been slow and difficult, leading to legal challenges.
As of April 2023, the Biden administration had already forgiven $17.2 billion in student loans for nearly 1 million borrowers who were defrauded.
In 2023, a panel of judges from the U.S. Court of Appeals for the 5th Circuit blocked the rule after a group of for-profit colleges in Texas filed a lawsuit. The colleges argued that the rule made it too easy for borrowers to claim fraud, which they believed would hurt their institutions.
The Supreme Court’s review of the case will determine whether the rule can move forward, potentially affecting many borrowers and shaping the future of student loan forgiveness.
