Update | Proposed Settlement in Sweet v. DeVos

April 10, 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.

 

What are the terms of the settlement agreement?

 

The settlement accomplishes the purpose of the case: to get the Department of Education to make decisions on borrower defense applications.

 

Terms:

  • Within 18 months of final approval of the settlement, the Department will resolve all borrower defense applications that were pending as of April 7, 2020;
  • Within 21 months of final approval, for the people it determines are eligible for relief, make good on that relief;
  • For anyone the Department had already found eligible for borrower defense relief as of April 7, the Department will provide a written decision within three months and provide relief within six months.
  • The Department will provide Plaintiffs’ Counsel with reports to be posted on this website stating:
    • how many borrower defense decisions the Department has made;
    • how many borrowers the Department has effectuated relief for;
    • what calculations 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 on claims from schools with large numbers of borrower defenses; and
    • the names of schools the Department has made borrower defense findings for.
  • The Department also confirms that:
    • it will provide written decisions to borrowers;
    • it will not put borrowers into involuntary collections (wage garnishment or treasury offset) while their borrower defense is pending; and
    • it will discharge the interest that accrued on borrowers’ loans while their borrower defenses were pending.

 

If the Department fails to meet the 18 and 21-month deadlines, plaintiffs can go back to court and ask for:

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

 

If a court stops the Department from applying its partial relief formula to determine how much debt should be discharged, the Department will still send written decisions to borrowers to let them know if their application was granted or denied.

 

In exchange for the plaintiffs’ agreement to dismiss the case, class members waive their right to pursue the claims asserted in the complaint: the Department’s refusal to make decisions on borrower defense applications. The plaintiffs do not waive unrelated claims, like challenging the decision on their borrower defense application or the amount of relief they receive.

 

Am I covered by the settlement?

 

The settlement covers people who had a pending borrower defense as of April 7, 2020. People who have already received a decision from the Department are no longer class members in this lawsuit. If you filed before April 7, 2020, and you haven’t gotten a decision yet, then you are covered.

 

Is the settlement in effect now?

 

No. The court must approve the settlement before it takes effect.

 

When will the court decide whether it will approve the settlement?

 

Settlement approval is a two-step process. First, the judge reviews the terms of the settlement to see whether or not the settlement appears reasonable and has no clear legal problems. On April 10, the parties asked the court to make this determination. If the judge thinks the settlement is fair, he will grant preliminary approval of the settlement and order the Department to notify all class members about the proposed settlement and provide them with the opportunity to object. Any objections will be shared with the lawyers from both sides of the case and the lawyers will have the opportunity to respond.

 

After the period for class members to object has ended, the judge will hold a final “fairness hearing” that is open to the public and that class members may participate in. Afterwards, the judge will grant or deny final approval of the settlement.

 

Once the judge has granted final approval, the settlement will go into effect.

 

 

Can I object to the settlement?

 

If the court grants preliminary approval, class members will receive a notice that the settlement has been preliminarily approved. That notice will say how to submit objections and the deadline for objecting.

 

If I am a class member, will I get money from the settlement?

 

No. The law that requires agencies to make timely decisions does not provide for money damages.

Under the law that requires 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 fulfill 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.