Student Loan Lawsuit Settlement Amount to $7.5 billion

Posted by Matin Varshochi in Student LoansJuly 11, 2022(Last Updated November 24, 2022)4 min read
Key Takeaways
  • A recent class-action lawsuit has led to a settlement of approximately $7.5 billion for student loan borrowers who had their debt relief claims denied. 
  • The Department of Education, under the Trump administration, was systematically denying many relief claims, which led to hundreds of thousands of borrowers not receiving the money they were rightfully entitled to.
  • As the final settlement amount has yet to be disclosed, a hearing is set to occur on July 28, 2022, to determine the total amount the members of the class-action lawsuit will receive.  
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A recent class-action lawsuit has led to a settlement of approximately $7.5 billion for student loan borrowers. The claim is against the Department of Education, under the Trump administration, which had intentionally not followed regulations implemented by the Obama administration. Doing so is believed to have led to many people having their debt relief claims denied. As a result, around 264,000 class members will be compensated for the actions of the Department of Education.

Details of the Lawsuit

During the Trump administration, between December 2019 and October 2020, the Department of Education was systematically and intentionally denying relief claims. As these relief claims were unjustly denied, many students could not receive the money they were rightfully entitled to. Consequently, due to the illicit actions of the Department of Education, a lawsuit was brought forward by the Project on Predatory Student Lending and the Housing & Economic Rights Advocates (HERA). 


As this lawsuit impacts hundreds of thousands of borrowers, the director of the Project on Predatory Student Lending, Eileen Connor, spoke out. She stated, "This momentous proposed settlement will deliver answers and certainty to borrowers who have fought long and hard for a fair resolution of their borrower defense claims after being cheated by their schools and ignored or even rejected by their government. It will not only help secure billions of dollars in debt cancellation for defrauded students, but charts a borrower defense process that is fair, just, and efficient for future borrowers."

Image Credit: ShutterstockProfessional /


The Project on Predatory Student Lending is a legal aid office based in Massachusetts. Its purpose is to help students receive legal help when they get exploited and mistreated when trying to receive student loans. So far, they have helped over one million students receive compensation for the mishandling of situations by the government and for-profit schools, and this lawsuit is the latest of the bunch.  

Eligible Members for the Settlement

Two groups of class members will be receiving compensation for this lawsuit. The first group, approximately 200,000 borrowers, are borrower defense applicants who received a denial notice from the Department of Education between December 2019 and October 2020. The group also attended certain for-profit schools. 


The 200,000 borrowers who attended one of the for-profit schools at the center of the lawsuit will receive a full refund, a credit repair, and the remainder of their loans discharged.


Resource: To view the full list of the for-profit schools that were a part of this lawsuit, click here

The second group, which amounts to approximately 64,000 borrowers, are those who did not attend one of the schools in the list linked above but are still eligible for compensation. These borrowers will have their applications reviewed with rolling deadlines. The applicant will receive a full refund if the Department of Education is unable to review their applications before the deadlines. 

Furthermore, if their initial application is not approved, these borrowers are given the opportunity to go back and revise their application in hopes of attaining approval the second time. 

Resource: If you wish to see if you are eligible for a compensation package through this class action lawsuit, click here to read more about whether you apply. 


How to Pay Back Student Loan Debt

Unfortunately, not everyone is eligible to receive compensation from this class action lawsuit and have their federal student loans forgiven. However, below are a couple of ways to pay off their federal loans over time without negatively impacting one’s financial situation. 


Income-Driven Repayment Plans

The Income-Driven Repayment Plan uses an applicant’s monthly income as the main factor during the application process. However, there are many other factors to be considered, like the number of people living in one residence. Once all the necessary information has been filled out, the calculator will determine a fair monthly repayment amount. 

Image Credit: Ben Von Klemperer /


The repayment plan can be beneficial when paying back student loans as it allows the applicant to pay a consistent amount each month. If you wish to apply for this repayment plan, it can be found on the federal student aid website.

Public Service Loan Forgiveness Program

Another form of student loan repayment is the Public Service Loan Forgiveness Program. This program allows those who have outstanding student loans to work full-time for public service and qualified employers. Once the applicant has made 120 monthly payments under an approved employer, the remainder of the outstanding debt will be forgiven as an incentive for working in the public sector.

Recommended Read: Refinance Your Student Loans

The Money Wrap-Up

As of July 10, 2022, the final figure that will be dispersed amongst the class action lawsuit members is still yet to be determined. However, a hearing on July 28, 2022, will contain the financial information regarding the amount the federal government must repay to the students who were deliberately denied relief claims.


Main Image Credit: Orlowski Designs LLC /


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