For-profit colleges asked the US Supreme Court on Wednesday to block a legal settlement that would cancel an estimated $6 billion in debt for students who say they were misled by the schools about job prospects.
(Bloomberg) — For-profit colleges asked the US Supreme Court on Wednesday to block a legal settlement that would cancel an estimated $6 billion in debt for students who say they were misled by the schools about job prospects.
The emergency application, which challenges the Education Department’s authority to cancel so many loans in the accord, bears similarities to a pending Supreme Court fight over President Joe Biden’s plan to slash the student debt of more than 40 million people.
The Supreme Court’s handling of the new case could offer hints about the outcome of the bigger fight. The court heard arguments on Biden’s plan Feb. 28 and is scheduled to rule by the end of June.
The borrowers in the latest case sued the Education Department in 2019, seeking action on long-pending requests to discharge their debt because of alleged wrongdoing by the schools they attended. The settlement went beyond the thrust of the lawsuit, with the Education Department agreeing to discharge loans for hundreds of thousands of borrowers who attended 151 schools.
In its Supreme Court filing, schools led by Everglades College Inc. said the department exceeded its authority under federal law. The colleges said the administration was making an “even more sweeping” claim than with the broader loan-forgiveness program, which centers on the economic fallout from the pandemic.
“The secretary’s claimed authority amounts to nothing less than the power to cancel, en masse, every student loan in the country,” the schools argued.
The case is Everglades College v. Cardona, 22A867.
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