450,000 defrauded student loan borrowers are eligible for debt forgiveness — here's who qualifies

Nearly 450,000 student loan borrowers are set to have their debts forgiven, thanks to a $23 billion class-action settlement involving the U.S. Department of Education. The affected individuals claim their schools misled them, and the Trump administration failed to honor their Borrower Defense rights. A federal appeals court recently ruled against the administration's attempt to delay a decision on the majority of applications, enabling around 200,000 more borrowers to receive relief.

This brings the total number of debt-forgiven borrowers under the settlement to approximately 450,000. The legal battle spanned three presidential administrations, with the case evolving from Sweet v. DeVos to Sweet v. Cardona to Sweet v. McMahon. One borrower's debt increased from $250,000 to roughly $400,000 while awaiting a decision on her Borrower Defense claim, according to Eileen Connor, president and director of The Project on Predatory Student Lending, the advocacy group that filed the lawsuit in 2019.

The Education Department acknowledged the need for more time to evaluate eligibility for relief, given the unexpectedly high number of applicants, which could result in a significant financial benefit to taxpayers. The settlement is based on the borrower's school and the timing of their Borrower Defense application submission. Eligibility is not a new qualification, as only those with pending claims as of November 2022 may qualify.

Private student loans do not qualify for Borrower Defense, although nearly two dozen states have tuition recovery funds for borrowers of closed for-profit schools. The average forgiven federal student loan balance exceeded $48,000, with individual amounts varying greatly. Borrowers may also qualify for a refund for any previous payments made on their debt, with the typical refund for eligible borrowers over $15,000. The deadline for clearing eligible borrowers' debts is June 15, 2027.