What student borrowers need to know about Sweet v. Cardona
$6 billion in student debt to be discharged in landmark class action lawsuit settlement
By Nancy Nierman, EDCAP Assistant Director
On June 24, 2022, The U.S. Department of Education (DOE) settled a lawsuit brought by student loan borrowers back in June 2018. The case is known as Sweet v. Cardona (formerly Sweet v. DeVos). The borrowers asserted the D.O.E. unlawfully refused to process or denied Borrower Defense to Repayment (BDR) claims during the Trump Administration.
BDR is a process by which federal student borrowers may request that their loans be discharged because the school they attended and took out loans for, misled them, or engaged in other forms of misconduct. Under the Trump Administration, it became virtually impossible to receive a BDR discharge. Thousands of borrowers, often without the benefit of a degree or transferable credits, were on the hook for these loans. With this settlement, $6 billion in student loan debt for almost 200,000 borrowers will be discharged.
Who will benefit from this settlement?
Anyone who filed a BDR claim on or before June 22, 2022 and did not receive a decision or received a denial in or after December 2019 will benefit. No action is needed.
What kind of relief will borrowers get?
Relief depends on whether the school the borrower attended is on DOE’s list of schools that have been identified as having engaged in misconduct.
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If the school named in the BDR claim IS on the list below, the borrower will receive automatic loan discharge, refunds for past payment, and negative items associated with this debt will be removed from credit reports. Borrowers in this category should expect relief within 12 months of final court approval (expected Fall 2022).
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If the school named in the BDR claim is NOT on the list below, individuals will be entitled to a decision using a streamlined review process, more favorable to borrowers. Notification of these decisions will be made according to a set timetable ranging from 6-30 months from the date of final court approval, depending on when the BDR claim was filed. This means that borrowers will have a better sense of when they will receive a decision. If the borrower does not get a decision by the deadline, they will get automatic loan discharge, refunds and credit adjustments.
Click here for the list of schools eligible for automatic loan discharge and the decision timetable.
What if borrowers have not filed a BDR claim?
Borrowers who did not filed a BDR claim before June 22, 2022 should do it now! Though these borrowers are not considered part of the class action suit, if they file between now and the date of the final court approval, they will be entitled to a decision within 36 months of the final court approval date. Borrowers will not get the benefit of the streamlined review process, but if they do not receive a decision by the deadline, they will be entitled to loan discharge, refunds and credit adjustments, same as those that are part of the class action suit.
We applaud the D.O.E. for providing relief for hundreds of thousands of borrowers who fell prey to unscrupulous colleges and universities and whose complaints have gone unanswered for way too long.
To read more about the case and the settlement, visit The Project on Predatory Student Lending (PSL) website.
If you have questions about the settlement, need help with a BDR application or any other student-loan related issue, contact EDCAP for free and unbiased advice at 1-888-614-5004 or edcap@cssny.org.