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.
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.
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 (“Borrower Defense applications”) were ignored by the Department of Education. Immediately after filing the lawsuit, the students asked the court to let them represent all students in the same situation, with a motion for class certification. The motion included more than 900 affidavits from students describing the harm that the Department’s inaction had 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.
Starting in December 2019, the Department began issuing form denial notices to tens of thousands of borrowers who had applied for loan cancellation. These notices did not contain any real information about why the applications had been denied. In March 2021, Plaintiffs supplemented their complaint to add a claim on behalf of all borrowers who had received form denial notices.
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 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 had been unresolved for over four years.
The Department of Education’s decision to keep these students in limbo further destroyed students’ credit and limited their access to federal student aid. For students who defaulted on their loans, the Department of Education 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 demanded that the Department do its job and start adjudicating their borrower defenses immediately.
In December 2019, the Department began issuing some borrower defense decisions—but the vast majority of them were form denial notices that did not contain any explanation about why the applications had been denied. The Department sent tens of thousands of these nearly identical notices between December 2019 and October 2020. The plaintiffs asked the court to stop the Department from issuing these unlawful form denials, and in October 2020, after a court hearing, the Department agreed that it would not issue any more form denials or collect on the loans of anyone who had received one until this litigation is resolved. In March 2021, the plaintiffs filed a supplement to their lawsuit, asking the court to invalidate all of the form denial notices and challenging the Department’s internal policies that had led to the denials.
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.
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 repeatedly ignored these students’ legal rights, the only way they could have their voices heard was through the courts. The students in this case continue to press the current administration to recognize their established rights.
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.
"I believe the work that is being done by the Project on Predatory Student Lending has helped bring light to a very dark corner of our education system. On a more personal level, the Project has given me the courage to speak about this issue. There can be a lot of fear and shame associated with being victims of education fraud. But the Project’s work has helped show me, and millions of other students who were cheated, that there is nothing to be ashamed of and that if we speak up and stand together we can make a difference."
- Theresa Sweet, the lead plaintiff in Sweet v. Cardona
To read statements in support of our case, click below.
To read testimony submitted by defrauded former for-profit college students, click below.
Student Loan Truth: The Real Heroes of NegReg
On October 4-8, the Department of Education held their second Negotiation Rulemaking, or NegReg, session of the year. This year, the broken borrower defense process is one of the top areas of discussion, and the Department of Education refused to include the very students who experience this process firsthand.
ADVISORY: Hearing Scheduled for Wednesday on Deposition of Former Education Secretary Betsy DeVos
Student borrowers on Wednesday will argue in a federal appeals court hearing that a subpoena to depose former Education Secretary Betsy DeVos in the class action lawsuit Sweet v. Cardona (formerly Sweet v. DeVos) must proceed.
Advocates and Borrowers Raise Significant Concerns as ED Declines to Name For-Profit College Borrowers to Rulemaking Committee on Borrower Defense | Press Release
The Project on Predatory Student Lending today raised significant concerns that the U.S. Department of Education has failed to select any former for-profit college borrowers for its negotiated rulemaking committee, including rejecting a nominee with the support of more than 1,200 former for-profit college students – the very people who have been most significantly harmed by the broken borrower defense process.
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.
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.
Law and Crime
Biden Administration Goes to Bat for Betsy DeVos, Tries to Shield Her from Deposition in Students’ Class Action Lawsuit | Law and Crime
The Biden administration argued Wednesday that former Secretary of Education Betsy DeVos should not have to give deposition testimony in a class action suit over the Department of Education’s (DOE) mishandling of thousands of student loans.
DeVos Urges Skeptical 9th Circ. To Quash Loan Relief Depo | Law360
Former Education Secretary Betsy DeVos and the U.S. Department of Education urged the Ninth Circuit on Wednesday to quash her deposition subpoena in a lawsuit by student borrowers seeking forgiveness from “predatory” for-profit college loans, but panelists indicated they were struggling to see how the lower court “clearly erred” issuing it.
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.