Supreme Court refuses to stop $6 billion student loan debt settlement

The Supreme Court will not stop a legal settlement that would cancel more than $6 billion in student loan debt from students who say they were misled by their schools, mostly for-profit institutions.

The settlement is the result of a class-action suit from nearly 200,000 borrowers against the Department of Education in 2019, which accused schools of boosting enrollment through misleading advertisements and exaggerating the quality of their education and future job prospects.

After years of litigation, the settlement was reached last year, but three institutions appealed the agreement to the Supreme Court, saying their inclusion was a “scarlet letter” and severely damaged their reputations.

A total of 151 institutions have students impacted by the settlement, and the three who challenged the suit — Lincoln Educational Services, American National University and Everglades College — have about 3,500 students eligible for loan relief.

The decision is not related to a challenge to President Biden’s attempts to cancel up to $20,000 in student loan debt for 40 million Americans. That case is expected to be decided by the court this summer.

The lawsuit was filed by attorneys general in 20 conservative states.

About 78,000 people have had their loans discharged so far, the Biden administration said in a court filing.