Student loan repayment overhaul could impact thousands of borrowers heres what to know
A critical debt deadline has passed — and for legions of borrowers, it could mean the difference between discharged debt and continued, crushing payments.April 15 was the deadline for the Education Department to issue its decision on applications filed by a group of post-class applicants under the Sweet v.McMahon settlement agreement.
According to the Project on Predatory Student Lending, the legal organization representing borrowers in the case, the Department’s failure to meet the deadline entitles borrowers to student loan discharge, refunds of past payments, and amended credit reporting.In 2022, a settlement was reached between the Education Department and hundreds of thousands of student loan borrowers.
Under the terms of the Sweet v.McMahon settlement, the Education Department was ordered to implement mass loan forgiveness for borrowers who submitted a Borrower Defense application by June 2022.
Meanwhile, the post-class applicants submitted applications within the five-month window between the settlement’s finalization and court approval.These post-class applicants were promised that their federal student loan debt would be eliminated if and when the department failed to review and decide their cases within three years.
As that window began to close early this year, the Trump administration sought an 18-month extension, a request that two federal district court judges denied.However, the court subsequently separated the post-class applicants into two groups, each with a distinct deadline.
Group 1, comprising borrowers who attended schools listed in a settlement appendix known as Exhibit C, was given a deadline of March 30.When the department missed this deadline, discharge notices were sent to 170,000 borrowers, nearly everyone in the group.
Group 2, comprising applicants who did not attend Exhibit C schools were given a deadline of April 15.Now that that deadline has passed, borrowers are reporting that no discharge notices have been received.
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