Sweet v. Cardona
Information for Class Members
Attorney Maggie O’Grady provides an update on the latest developments in Sweet v. Cardona (formerly Sweet v. DeVos), including the latest filing and some frequently asked questions.
To learn if you are a member of the class, and to find out more information for class members, click the link below.
Who Is Involved In This Case?
Named Plaintiffs brought this lawsuit in June 2019 on behalf of themselves and all other former students whose claims for loan cancellation have stalled. Immediately after filing the lawsuit, the students asked the court to let them represent all the students, with a motion for class certification. The motion included more than 900 affidavits from students describing the harm that the Department’s inaction has caused – with 96% saying their lives were worse than before they attended school. In October 2019, the court certified the class of over 200,000 borrowers with pending claims.
What Is This Case About?
Over the past several decades, millions of students borrowed federal student loans to attend various for-profit colleges, including ITT Technical Institute, Corinthian Colleges, the Art Institutes, Salter College, Brooks Institute of Photography, and more. The schools falsely promised students high-paying jobs, state-of-the-art vocational training, and long and fulfilling careers.
Between 2015 and 2019, over 200,000 of these former students have asserted their right under federal law to discharge their federal student loans due to their schools’ misconduct. As it was legally obligated to do, the Department of Education started to adjudicate these borrower defenses, approving nearly 28,000 borrower defenses in the six-month period before January 20, 2017.
Then, under Secretary DeVos, the Department of Education halted all processing of borrower defense claims, refused to adjudicate any borrower defense from any student for well over a year, and ordered the office of Federal Student Aid to stop processing borrower defense applications. As of 2019, more than 200,000 students had a borrower defense pending, many of them have been unresolved for over four years.
The Department of Education’s decision to keep these students in limbo has further destroyed students’ credit and limited their access to federal student aid. For students who have defaulted on their loans, the Department of Education has invoked its extraordinary powers to garnish their wages or seize their tax refunds (for many, their Earned Income Tax Credit).
With this lawsuit, the plaintiffs are demanding that the Department do its job and start adjudicating their borrower defenses immediately.
Where and When Was This Case Filed?
This case was filed in the United States District Court for the Northern District of California in the San Francisco Bay Area on Tuesday, June 25, 2019.
After a proposed settlement agreement was filed in spring of 2020, the Department of Education sent out tens of thousands of blanket denials of borrower defense claims. Many of these form letters denied relief due to a “lack of evidence,” despite the extensive evidence submitted, even in cases where other government enforcement agencies had found fraud. After a historic hearing held on Zoom and attended by over 500 student borrowers in fall of 2020, the judge found the Department of Education was not acting in good faith by sending out blanket denials and rejected the proposed settlement.
The judge also ordered discovery, allowing lawyers for the student borrowers in this case to obtain documents and to depose officials at the Department of Education. A review of these documents and depositions revealed alarming evidence that the U.S. Department of Education created a sham process designed to deny borrowers debt relief regardless of evidence. In March 2021, student borrowers filed a supplemental complaint citing this new evidence.
“This has put my whole life on hold. I can’t sign for home, a car, anything because I don’t know what’s going to happen to this debt. It’s extremely stressful and impacts my whole family. It’s beyond disappointing. The Department of Education did nothing to stop these schools from doing this in the first place and now they are ignoring those of us who were cheated on their watch."
Jessica Jacobson, former NEIA student
"Students defrauded by for-profit colleges should not face financial ruin armed with only a hollow degree blessed by a passive Education Department. If Secretary DeVos believes there’s no urgency in granting these students the relief they are entitled to, then our legal system must fill the void. Every single day that this financial burden rests on students’ shoulders is another day of justice deferred."
Congressman Joe Kennedy III
Why this case?
The law is clear: students who experienced fraud should not be required to pay back federal loans that should never have been made by the Department in the first place. Since Betsy DeVos continues to ignore these students’ legal rights, the only way they can have their voices heard is through the courts.
This lawsuit builds on past legal efforts to hold the Department of Education accountable and stand up for students through court action, which has become one of the only ways for defrauded students to assert their rights. In the case of Williams v. King, students fought back against having their tax refunds stolen by the Department of Education, and won. In the case of Calvillo Manriquez v. DeVos, students preliminarily stopped the Department from limiting the relief it provided to students who it had already decided were entitled to full relief. And in Bauer v. DeVos, a judge forced the Department of Education to implement the 2016 Borrower Defense rule. In August 2019, Secretary DeVos issued a new borrower defense rule imposing near-impossible standards for student borrowers. in February 2020, the Project challenged the new rule in court.
To read statements in support of our case, click below.
To read testimony submitted by defrauded former for-profit college students, click below.
“We are calling on the Department to do what is right when it sees evidence of widespread fraud” – Statement on Approval Of Additional Student Borrower Defense Claims
Department of Education announced that it will approve borrower defense applications for a select 1,800 student borrowers who attended the predatory for-profit colleges of Westwood, Marinello, and the Court Reporting Institute. It will cancel all outstanding loan balances for these individuals, wiping out approximately $55.5 million in predatory student loan debt.
Student Loan Truth: Eynelys’ DeVry University Story | Blog
DeVry misled Eynelys about their financial aid plan and job placement services, leading her to drop out of her program. In 2016, the Federal Trade Commission sued DeVry for making deceptive claims related to graduate job placement rates and compensation. Eynelys filed a borrower defense application four years ago, seeking relief from her student loan debt, and still has not received a decision from the Department of Education.
How COVID-19 Has Impacted Thousands of Defrauded Student Borrowers | Blog
The COVID-19 pandemic has caused unprecedented economic vulnerability for millions of people across the country. For student borrowers who have been defrauded by for-profit colleges, this struggle has only been exacerbated.
Plaintiffs' filed an Amended Complaint citing new evidence that the U.S. Department of Education not only illegally delayed processing borrower defense claims, but created a sham process designed to deny borrowers debt relief regardless of evidence.
Order Denying Settlement & For Discovery
The Court denied the settlement and ordered discovery on the Department of Education’s explanations of its process for deciding claims, and will consider enjoining the use of the form denial notices.
Order Granting Sweet Class Certification
Order Granting Motion For Class Certification
Courthouse News Service
Betsy DeVos Ordered to Testify in Student Borrower Class Action | Courthouse News Service
Rejecting arguments that making a cabinet official testify threatens the separation of powers, a federal judge this week ordered former Education Secretary Betsy DeVos to answer questions about long delays and mass denials of student debt relief claims.
90% of Borrowers Who Claim They Were Scammed By Their Schools Were Denied Relief | MarketWatch
Students who attended colleges that have misled them have the right under the law to have their federal student loans discharged, but over the past few years, accessing that relief has been nearly impossible, despite evidence of malfeasance by their schools, new documents suggest. More than 200 borrowers who attended a school where an admissions representative pled guilty to making a false statement in an application for federal student aid had their applications for relief denied by the Department of Education, according to the documents.
New York Times
A DeVos System Allowed 12 Minutes to Decide Student Loan Forgiveness | New York Times
Former Education Secretary Betsy DeVos made no secret of her disdain for a program intended to forgive the federal student loans of borrowers who were ripped off by schools that defrauded their students. She called it a “free money” giveaway, let hundreds of thousands of claims languish for years, and slashed the amount of relief granted to some successful applicants to $0.