Sweet v. Cardona Update: Relief Rolls Out For Defrauded Student Loan Borrowers

Roughly 200,000 defrauded student loan borrowers in the class action lawsuit were scheduled to get relief in late January. Here’s what to know if you’re still waiting for your settlement.
Eliza Haverstock
By Eliza Haverstock 
Updated
Edited by Des Toups

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Sweet v. Cardona update: As of Jan. 28, 2024, almost all borrowers in the automatic relief group should have received their full settlement. Relief is ongoing for other borrowers.

In late January, relief was slated to roll out for hundreds of thousands of borrowers who were defrauded by their colleges. It’s the result of a final $6 billion-plus settlement in Sweet v. Cardona, a class action lawsuit filed by borrowers who argued they’d been defrauded by one of about 150 mostly for-profit colleges. A second group of borrowers is slated to receive relief this summer.

Originally filed by borrowers in 2019, the Sweet v. Cardona settlement has been nearly five years in the making. A federal judge cleared the last major remaining legal roadblock in February 2023, affirming a prior ruling from November 2022.

One last major legal hurdle remains. On Dec. 5, 2023, the Ninth U.S. Circuit Court of Appeals heard oral arguments from three schools involved in the case — American National University, Everglades College, Inc. and Lincoln Educational Services, Inc. — who appealed the approved settlement and asked for relief to stop. Until the court makes a decision, the Department of Education will delay discharging any loans associated with these schools.

If you think you may qualify for Sweet v. Cardona relief, here’s what you need to know.

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What is Sweet v. Cardona?

Sweet v. Cardona is a class action lawsuit first brought by borrowers who had been waiting years for the Education Department to process or approve their borrower defense applications. The original name of the complaint, filed in June 2019, was Sweet v. DeVos.

In their initial complaint, the plaintiffs alleged that the Education Department “intentionally adopted a policy of inaction and obfuscation” for borrower defense applications since at least 2017.

Borrower defense offers loan discharge to borrowers whose schools — mostly for-profit — misrepresented such things as graduation and employment rates, financial aid or even school classroom resources. The program launched in 2015, but discharges slowed to a near-complete halt during the Trump administration due to rules changes and inaction.

Who gets Sweet v. Cardona relief — and when

The settlement applies to nearly 300,000 borrowers who had a pending borrower defense application as of June 22, 2022. This cohort, also called the “class,” is split into two categories: the automatic relief group and the decision group. A separate group of about 200,000 borrowers, called the “post-class” group, can also get Sweet v. Cardona relief.

Automatic relief group

This group consists of people who borrowed to attend one of the 151 schools listed in the lawsuit — about 200,000 borrowers, or 75% of the class. If you’re in this group, you’ll get “full” and “automatic” relief, including:

  • Any outstanding student loans listed on your borrower defense application will be discharged. 

  • A cash refund for any payments you previously made on your federal student loans. 

  • History of these loans will be removed from your credit report. 

You should receive your full settlement relief on or before Jan. 28, 2024.  

Note: class members who took out loans to attend American National University, Everglades College, Inc. and Lincoln Educational Services, Inc. are not yet eligible for relief, as a legal appeal from these three schools is currently under consideration.

Decision group

This group consists of people who submitted borrower defense applications, but did not attend one of the schools listed in the lawsuit — about 64,000 borrowers, or 25% of the class. They’ll receive a decision from the Education Department on a staggered basis, depending on when they submitted a borrower defense application.

Here’s the latest notification timeline, according to the Department of Education:

Application submitted

Decision notification deadline

Between Jan. 1, 2015, and Dec. 31, 2017.

No later than July 28, 2023.

Between Jan. 1, 2018, and Dec. 31, 2018.

No later than Jan. 28, 2024.

Between Jan. 1, 2019, and Dec. 31, 2019.

No later than July 28, 2024.

Between Jan. 1, 2020, and Dec. 31, 2020.

No later than Jan. 28, 2025.

Between Jan. 1, 2021, and June 22, 2022.

No later than July 28, 2025.

If your application is approved, you should receive your relief within one year of notification. You are entitled to the same full settlement as the borrowers in the automatic relief group.

Borrowers in this class group who don’t get a notification by the deadline are also entitled to full, automatic relief.

Post-class group

About 206,000 borrowers applied for borrower defense between June 22, 2022 and Nov. 16, 2022 — the time between settlement execution but before the final court approval. This group is not technically part of the “class” of borrowers in the lawsuit, but they can still get relief.

These borrowers should have received a notice confirming their post-class applicant status by May 28, 2023.

The Department of Education must send these so-called “post-class applicants” an individual decision within three years, or by Jan. 28, 2026 at the latest. If the Department misses this deadline, those borrowers will get full, automatic relief.

There’s not yet a confirmed timeline for when approved post-class applicants can expect to receive relief.

Do I have to make student loan payments?

If you are part of the Sweet v. Cardona class — either the automatic relief group or the decision group — the Education Department will pause your federal student loans that are eligible for borrower defense. This payment pause, called “administrative forbearance,” means that you don’t have to make student loan payments while you wait for application processing or loan discharge, even if your servicer sends you a bill in error. The Education Department will reimburse any interest that accrues during your forbearance, even if they eventually deny your borrower defense application.

The forbearance should be automatic for direct loans. If you have commercially held FFELP student loans, you may have to contact your servicer and explain that you’re eligible for administrative forbearance due to a pending borrower defense decision or settlement.

If only some of your student loans are included in your borrower defense application, you’ll still need to continue making payments on the other student loans which don’t qualify for borrower defense. Administrative forbearance won’t apply to any private student loans, either.

Borrowers who applied for borrower defense after Nov 22, 2022 (including the post-class group) can still ask their servicer to place them in forbearance while they await a decision or settlement. However, interest will still accrue for these borrowers. As an alternative to forbearance, consider a new income-driven repayment plan called SAVE. If your income is low enough, you can qualify for $0 monthly payments — and interest won’t build up month-to-month.

What if my application was denied?

You’re not out of luck if your borrower defense application submitted prior to Nov. 16, 2022 was denied.

If your borrower defense application was initially denied between December 2019 and October 2019, the Education Department is rescinding that denial and you will be treated as a member of the Sweet v. Cardona class.

If you’re eligible for the Sweet v. Cardona relief, but your application doesn’t meet approval standards, the Department will send you a “revise and resubmit” notice explaining why your application was denied. You have six months from the day you got this notice to resubmit it. If your application is denied a second time, you may challenge the decision in federal court. Borrowers awaiting an overdue decision about their borrower defense application can fill out the class notice survey, which is operated by The Project on Predatory Student Lending (PPSL), one of two nonprofit legal organizations representing affected borrowers in the lawsuit.

How to get help if your relief is overdue

The Education Department was legally obligated to disperse settlements to borrowers in the automatic relief group by Jan. 28, 2024. However, some borrowers have reported that their relief is missing or overdue.

If you’re awaiting an overdue settlement, contact The Project on Predatory Student Lending and the Federal Student Aid office’s ombudsman.

For more information, the PPSL offers a helpful Sweet v. Cardona FAQ section on their website. The Federal Student Aid office also has more information.

What if I don’t qualify?

If you believe you’ve been defrauded by your school, but you didn’t apply for borrower defense by Nov, 15, 2022, you’re not eligible for the Sweet v. Cardona settlement.

However, you can still apply for borrower defense relief on StudentAid.gov.

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