WASHINGTON (CNN) -- The U.S. government will offer hundreds of millions of dollars worth of cash and debt relief to settle black farmers' claims that they lost loans and disaster relief because of discrimination in the Agriculture Department.

The settlement, approved Tuesday by U.S. District Judge Paul Friedman, gives the farmers a tax-free cash payment of $50,000 and wipes out their debts to the Agriculture Department. The farmers involved in the case typically owe $75,000 to $100,000.

In addition, the farmers also will be relieved of 25 percent of back taxes owed plus $50,000.

The farmers claim they were systematically denied USDA farm loans, disaster aid and other assistance because of their race, and did not get a fair hearing at the USDA when they appealed. The discrimination suit alleged many of the farmers were forced off their land as a result.

Reported estimates of the settlement's total cost to the government ranged from $375 million to as much as $600 million.

The overall cost will vary based on how many farmers participate, but the numbers are considerably lower than the $3 billion the plaintiffs sought in damages.

Discrimination blamed on past Cabinets

Fewer than 1 percent of U.S. farmers are black, and studies show blacks are leaving the business at three times the rate of whites.

Agriculture Secretary Dan Glickman has acknowledged past discrimination at the USDA, but blamed many of the problems on previous administrations' actions -- particularly the closure of the USDA's civil rights office under President Ronald Reagan. President Bill Clinton reopened that office.

John Boyd, one of the attorneys for the farmers, said it was unclear how many would be able to participate in the settlement. Many of them had not kept the records they needed to prove the USDA discriminated against them.

"This is make or break for them," Boyd said. "This won't buy them a new farm or a new tractor, but it will give them an opportunity to improve their lives."

The pending deal is significantly higher than the $15,000-per-farmer offer the agency made this summer, plaintiffs said.

Reuters contributed to this report.