The Supreme Court just awarded thousands of student loan holders a win. On Thursday, the United States Supreme Court ordered that $6 billion in student debt relief be granted to 200,000 borrowers as part of a settlement from years-long litigation known as Sweet vs. Cardona. The case was initially launched in 2019 on behalf of borrowers with blocked borrower defense claims, or claims borrowers can bring if they feel the institution they attended cheated them. If granted, their debt would be forgiven.
President Joe Biden’s Education Department reached an agreement last summer with the Plaintiffs, and a federal court approved the relief in November. However, three schools mentioned in the settlement contested the ruling and asked a lower court to halt the relief while the legal process played out. Their motion was denied in the Ninth Circuit Court of Appeals, and the Supreme Court has now reached the same result and also denied their motion.
That the application for stay presented to Justice Kagan and referred to the Court is denied, the Supreme Court noted in a short order. It did not justify its decision on why it was denied.
In their court petition, the three colleges claimed they were not allowed “due process” to react to the settlement’s assertions and that the deal had harmed their image. Conversely, the Education Department disputed those claims. The Education Department wrote in a response that was filed on Wednesday with the Supreme Court that they had already begun implementing the settlement by advising class members about the discharges, directing loan servicers so that they can start the process of discharging the debt, updating its own internal systems and implementing the streamlined procedures for adjudication of reopened cases.
The Education Department said that if the settlement were stayed, it would cause confusion; borrowers, lenders, and the public would become confused, hindering the Department from effectively implementing borrower defenses.
This move differs from Biden’s broader offer to erase up to $20,000 in federal student debt. Biden’s plan for loan forgiveness was halted in November owing to two conservative-backed lawsuits trying to permanently prevent the relief. The Supreme Court heard oral arguments on those cases in February. It is scheduled to make a final judgment by June on the constitutionality of the wide debt relief package sponsored by the Biden administration.