Update | Proposed Settlement in Sweet v. DeVos

May 29, 2020

This post was originally published on April 10, 2020 and was updated on May 29, 2020.

On April 7, 2020, students and the Department of Education reached an agreement to resolve the Sweet v. DeVos lawsuit. Before the settlement takes effect, the Court must approve it.

We filed a motion for preliminary approval of the settlement on April 10, 2020. This post explains the terms of the proposed settlement and the process that will determine whether the settlement will go into effect.

 

1. I got an email or letter from the Department of Education about this case. What does it mean?

Starting on May 29, 2020, the Department notified all borrowers who have pending borrower defense applications that they may be impacted by the settlement proposed in this case. The notice explains the terms of the settlement, and the borrower’s right to object.

 

2. What are the terms of the settlement?

The settlement accomplishes what we brought this case to do: it guarantees that all borrowers will receive a timely decision from the Department of Education on their borrower defense decision. Under the law that requires government agencies to make timely decisions, we could only require the Department to make the decisions it failed to make; we could not ask for additional damages or tell them to grant specific individuals’ borrower defenses. The settlement designates consequences for the Department if it fails to live up to its obligations under the agreement (called “breaching” the agreement). In exchange for the settlement, plaintiffs and class members waive the ability to pursue the claims asserted in the complaint. The full text of the proposed settlement is here.

The settlement only covers individuals who had a pending borrower defense as of April 7, 2020. People who had already received a decision from the Department before April 7 are no longer class members in the lawsuit.

Settlement Relief Terms: All individuals who submitted a borrower defense, but were still waiting for the Department to decide their borrower defense as of April 7, 2020 will receive the following relief under the settlement if it is approved by the Court:

  • Within 18 months of final approval from the Court, the Department will resolve all outstanding borrower defense applications pending as of April 7, 2020;
  • Within 21 months of final approval from the Court, the Department will discharge some or all of the debt of individuals who the Department determines are eligible for relief;
  • For individuals the Department has already decided are eligible to receive borrower defense relief, the Department will provide the borrower with a written decision within three months and provide relief within six months.
  • The Department will provide Plaintiffs’ Counsel with reports they will post on this website stating
    • How many borrower defense decisions the Department has made;
    • How many borrowers the Department has effectuated relief for;
    • What relief methodologies the Department is using to determine how much of a borrower’s loan it will discharge when it grants a borrower defense;
    • How many decisions the Department has made regarding schools that have received large numbers of borrower defenses;
    • The names of schools the Department has made borrower defense findings for;
  • The Department has also represented that it will:
    • Provide written decisions to borrowers;
    • Not put borrowers into involuntary collections while their borrower defense is pending, and
    • Provide borrowers with an interest credit to discharge the interest that accrued on borrowers’ loans while their borrower defenses were pending.

Breach Terms: If the Department fails to fulfill its decision-making obligations under the settlement agreement, the Department will do the following:

  • Discharge 30% of an affected borrower’s borrower defense debt for each month it fails to issue a decision or effectuate relief
  • Discharge 80% of an affected borrower’s borrower defense debt if the Department certifies a borrower for involuntary collections (like wage garnishment or tax refund offset)

If the Department is stopped by a Court from applying its relief methodologies to determine how much debt should be discharged for borrowers whose borrower defenses were granted, the Department will still send written decisions to borrowers to let them know if their application was granted or denied.

 

3. Is the settlement in effect now?

No. The court must grant final approval of the settlement before it can go into effect.

 

4. How long will it take for the court to determine whether it will approve or reject the settlement?

The court granted preliminary approval of the settlement agreement on May 29, 2020, and ordered the Department to notify class members about the settlement and their opportunity to object. Class members have until August 20, 2020 to object to the settlement. Lawyers from both sides of the case will have an opportunity to respond to any objections.

After the period for class members to object to the settlement has ended, on August 20, 2020, the court will hold a final “fairness hearing” that is open to the public. Class members may participate. After that hearing, the Court will grant or deny final approval of the settlement.

The hearing will be held on October 1, 2020, beginning at 8am, at the following address:

United States District Court

Northern District of California

450 Golden Gate Avenue, Courtroom 12, 19th Floor

San Francisco, California 94102

After the hearing, if the court grants final approval, the settlement will go into effect.

 

5. Do I need to write to the court if I agree with the settlement?

No. You do not need to do anything if you agree with the settlement.

 

6. Can I object to the settlement?

You can submit written objections or comments to the court or request to speak at the fairness hearing. You can send objections or comments to:

Clerk of the Court

United States District Court

Northern District of California

450 Golden Gate Avenue

San Francisco, California 94102

The Clerk will provide copies of the written comments to all of the lawyers on both sides, and the lawyers will have an opportunity to respond to objections before the final hearing.