The Supreme Court decided not to block a $6 billion student loan debt settlement based on thousands of claims that colleges misled students.
Several of the colleges had tried to challenge the settlement but the Supreme Court rejected their requests.
The 200,000 claims made up a class action lawsuit that a number of colleges, mostly for-profit institutions, misled students who in turn took out federal loans.
The case is not related to President Joe Biden’s student debt relief program, which was blocked by a federal appeals court and is set to be voted on by the Supreme Court.
California-based U.S. District Judge William Alsup approved the settlement in November.
The petition to the Supreme Court was filed by Everglades College, Lincoln Educational Services Corp. and American National University. According to the Justice Department, about 3,800 of the affected loans came from those schools and many have already been discharged. There are a total of 151 schools involved in the settlement.
The Biden administration said this week that about 78,000 borrowers had already had their debt forgiven under the settlement.
All three schools were also placed on a Department of Education list of schools with credible claims of “substantial misconduct.” The schools argued those allegations were never proven.
While the schools objected to being put on the list and claimed Secretary of Education Miguel Cardona did not have the power to cancel the loans, the government’s lawyers argued that the settlement didn’t actually impose “any duties or liabilities upon the relevant schools.” They added that there is no evidence the any of the schools suffered any “reputational harm” as a result of being on the list.
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