The Supreme Court rejected a $6 billion student loan debt settlement based on thousands of accusations that institutions deceived students.
Several of the colleges had tried to challenge the settlement but the Supreme Court rejected their requests.
The 200,000 claims were part of a class action lawsuit alleging that mainly several for-profit colleges misled students who then took out federal loans.
The case is unrelated to President Joe Biden’s student debt relief program, which was blocked by a federal appeals court and set to be voted on by the Supreme Court.
In November, U.S. District Judge William Alsup of California authorized the settlement.
Everglades College, Lincoln Educational Services Corp., and American National University filed the petition with the Supreme Court.
According to the Justice Department, approximately 3,800 affected loans originated from those colleges, with many already being dismissed. In total, 151 schools are involved in the settlement.
The Biden administration said this week that about 78,000 borrowers had already had their debt forgiven under the settlement.
All three schools were also added to a list maintained by the Department of Education of schools with credible reports of “substantial misconduct.” According to the schools, those charges were never proven.
While the schools appealed to being placed on the list, claiming Secretary of Education Miguel Cardona had the authority to cancel the loans, the government’s lawyers maintained that the settlement did not impose “any duties or liabilities upon the relevant schools.” They went on to say that there is no indication that any of the schools suffered “reputational harm” due to their inclusion on the list.
