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 April 14, 2023

Supreme Court refuses to block $6 billion settlement cancelling student debt for 200,000

The Supreme Court refused to block a $6 billion settlement that will cancel student debt for some 200,000 borrowers, Breitbart reported. The decision was handed down Thursday without comment from the court.

The emergency stay request came on behalf of Lincoln Educational Services Corp., Everglades College, and American National University. They were lumped in with more than 150 schools that were sued in a class-action lawsuit.

Students had claimed they were unable to find jobs despite promises or impressions made during recruiting. When they sought help from the borrower defense program, they were ignored.

The group filed the 2018 lawsuit that yielded the multi-billion dollar award. In July, U.S. District Judge William Alsup ruled in favor of the collective plaintiffs against the institutions.

The court agreed that the Education Department incorrectly rejected claims made to the government. Borrowers are allowed to seek restitution on the grounds there was "substantial misconduct … whether credibly alleged or in some instances proven," the Washington Post reported.

However, the request for the stay from the three institutions was made on the grounds that the government failed to consider the reputational damage to the institutions when finding for the plaintiffs. The lawsuit also claimed that the Education Department flouted its own guidelines for awarding the claimants.

With the ruling standing as issued, it will allow another 64,000 students from those same institutions to apply for relief. Already, 78,000 borrowers have had their loans wiped away due to the settlement.

The decision comes as the federal government grapples with a promise President Joe Biden made to cancel the debt of nearly 40 million borrowers. He announced his fiat before the 2022 midterm elections, and unsurprisingly, the matter is tied up in the Supreme Court, the Associated Press reported.

A final decision from the court is expected to come in late June. Biden attempted to use the excuse of pandemic relief to ram through loan forgiveness but will likely see it thrown out of the right-leaning court.

Several states, including Nebraska, sued on the grounds that the 20 million student loan borrowers would see their debt forgiven in a "windfall" that is beneficial rather than restorative. "This is the creation of a brand new program, far beyond what Congress intended," Nebraska Solicitor General James Campbell told the court.

Another argument against the program is that Biden declared the end to the coronavirus pandemic on Monday, NPR reported. Weeks before the emergency declaration was set to expire, the president signed a congressional resolution that garnered bipartisan support, ending such programs.

Democrats love handouts because they translate to more votes. Student loan forgiveness seems like a slam dunk in that case because it captures younger, college-educated voters.

However, the policy has many flaws, not the least of which is that there's no legal basis to do it except for clear cases of institutions committing abuse or fraud. Simply forgiving borrowers because they don't want to pay their loans back is unfair to the taxpayers footing the bill.

The worst aspect of blanket student loan forgiveness is that it benefits those who have received higher education and are likely to be more affluent. This fact does not sit well with blue-collar workers and other voting blocs that Democrats rely on -- and Democrats may find themselves on the losing end of a handout for once.

Written By:
Christine Favocci

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