student debt cancellation
The US Department of Education has agreed to the student debt cancellation for 200,000 borrowers. Source: Paul Morigi/Getty Images North America/Getty Images via AFP

Six billion US dollars. That’s how much student debt cancellation will be wiped clean by the Biden administration for 200,000 borrowers who claimed their colleges defrauded them. 

According to The New York Times, those who applied for relief will have their loans erased if they attended one of more than 150 schools named in the class-action settlement, nearly all of which are for-profit colleges and vocational programmes. 

Many of the schools included in the settlement are out of business, while the deal also includes colleges that are still operating, including the University of Phoenix, Grand Canyon University and DeVry University, said the report.

The proposed settlement comes amid a longstanding lawsuit challenging the Education Department’s handling of the “borrower defense” law, which entitles federal loan borrowers to debt relief when their college misleads them or defrauds them.

The proposed agreement still needs to be approved by a judge.

The class-action lawsuit accused the Trump administration — and then the Biden administration — of illegally delaying for years any action on the applications that borrowers had filed with the Education Department seeking debt relief, reported Politico. 

student debt cancellation

Student debt cancellation is a big topic in the US. Around 43 million Americans have federal student loan debt. Source: Jemal Countess/Getty Images North America/Getty Images via AFP

US student debt cancellation: Do international students qualify?

While the US Department of Education has agreed to the student debt cancellation for 200,000 borrowers, Politico reported that the loan relief as part of the settlement is limited to borrowers who have already filed an application with the Education Department. 

According to Federal Student Aid, many non-US citizens qualify for federal student aid. This includes eligible noncitizens such as US nationals and natives of American Samoa or Swains Island, and those with a green card

The borrower defense is exclusive to students who were “misled, defrauded, or otherwise harmed by predatory colleges and universities” to seek forgiveness on their loans.

According to the US News and World Report, students can decide whether to should submit an application for loan forgiveness under borrower defense by first finding out if their student loans are eligible. Only federal direct loans are eligible for forgiveness under borrower defense.

Student debt has long been a concern in the US, where the Federal Reserve estimates that it amounts to a staggering US$1.76 trillion, reported AFP. 

Around 43 million Americans have federal student loan debt. On average, they have an outstanding debt of close to US$41,000, according to think-tank Education Data Initiative. US President Joe Biden this year extended a moratorium on student loan repayment and interest.

He is reportedly nearing a decision on whether to cancel US$10,000 in federal student loan debt — one of his campaign promises — for all borrowers.