Sweet v. Cardona Class Members — Project on Predatory Student Lending (2024)

Be aware that there may be scammers contacting you regarding the Sweet v. Cardona lawsuit and settlement. As the Federal Trade Commission (FTC) says: Don’t pay anybody for anything related to your borrower defense claim. Nobody can move you up in line, give you special access, or guarantee a successful application. Not for free, and certainly not for money. And only scammers will ask. And if you spot a scam, tell the FTC:ReportFraud.ftc.gov. Visit the FTC’s website for more information.

The Latest

Hearing on Settlement in Sweet v. Cardona

The final settlement was approved on November 16th. More details to come. Find our guide to the settlement here.

You can follow us on Twitter @EdDebtJustice for the latest case updates.

The settlement sets out procedures for resolving the borrower defense applications of everyone who had an application pending as of June 22, 2022. In short, class members who took out loans for attendance at certain schools will automatically receive loan discharge, refunds, and credit report adjustments. Class members who attended other schools will receive decisions on their borrower defense applications within a set timeline, depending on how long their applications have been pending. The Department will rescind all of the denial notices it issued between December 2019 and October 2020. For more details, please see the settlement FAQs below or watch the screencast video explainer below:

Top 10 Sweet Settlement Questions

The settlement was approved on November 16, 2022. If there are no appeals, then the litigation will be over. The Department of Education will be bound to the procedures set out in the agreement, and the lawsuit will be dismissed.

The settlement will take effect once the time to file an appeal has passed which will be January 17th, 2023. If a party does file an appeal before that date, it could delay the effective date. We will fight to defend the settlement in the event of an appeal. Please continue to check our website for updates.

The settlement divides the class—all individuals who had a borrower defense application pending as of June 22, 2022—into two groups.

The first group is the automatic discharge group. You are a member of this group if you are a class member who submitted a borrower defense application relating to a school on this list. Within one year of the effective date of the settlement agreement—currently, January 17, 2023—these class members will have their outstanding loans relating to these schools fully discharged, will receive refunds of any amounts they previously paid to the federal government toward those loans, and will have the credit tradeline associated with these loans deleted from their credit report (“Full Settlement Relief”).

The second group is the decision group. You are a member of this group if you submitted a borrower defense application relating to a school or schools that are not on the list above. If you are in the decision group, you will receive an individual decision on your entitlement to settlement relief according to the following timeline:

• For applications submitted on or before December 31, 2017, within six months of the Effective Date of the settlement agreement (currently, January 17, 2023);

• For applications submitted from January 1, 2018, to December 31, 2018, within 12 months of the Effective Date;

• For applications submitted from January 1, 2019, to December 31, 2019, within 18 months of the Effective Date;

• For applications submitted from January 1, 2020, to December 31, 2020, within 24 months of the Effective Date; and

• For applications submitted from January 1, 2021, through June 22, 2022, within 30 months of the Effective Date.

If the Department fails to issue a decision within the timeline set out above, you will receive Full Settlement Relief.

The Department will use a “streamlined” procedure to evaluate applications of class members in the decision group. This means that the Department will accept all allegations in the application as true; will not require further supporting evidence; will not require proof of reliance; and will not apply any statute of limitations.

If you are in the decision group and you are determined to be eligible for relief, you will receive Full Settlement Relief (the same benefits as members of the automatic discharge group). You will receive this relief within one year of the date you receive your approval decision.

If you are in the decision group and the Department determines that your application does not meet the standards for approval under the streamlined procedures, you will receive a “revise and resubmit” notice. This notice will explain why your application was not approved and provide examples of successful applications. You will have six months from receipt of this notice to submit a revised borrower defense application to the Department. If you submit a revised application, the Department will have six months to either grant relief or issue a final denial notice. If you choose not to resubmit, your notice will convert to a final denial upon the expiration of the six-month resubmission window. If your application is denied, you have the right to challenge that denial in federal court.

What will happen to my borrower defense application under the settlement?

If you applied for borrower defense after June 22, 2022, but before November 16, 2022, then you are not a member of the class as defined in the settlement agreement. Instead, you are a “Post-Class Applicant.”

The settlement provides certain benefits to Post-Class Applicants. Under the settlement, Post-Class Applicants will receive decisions on their applications within 36 months of the Effective Date of the settlement. If the Department fails to provide any Post-Class Applicants with a decision during that time period, then they will receive Full Settlement Relief (the same relief as if they were a class member in the decision group who did not receive a timely decision).

Post-Class Applicants will receive individual decisions on their applications regardless of whether they borrowed to attend a school on the Exhibit C list applicable to the automatic discharge group of the class. In other words, even if you attended a school on the list, you will not receive an automatic discharge if you applied for borrower defense after June 22, 2022 but before November 16, 2022. Post-Class Applicants also will not have their applications reviewed under the “streamlined” procedures applicable to class members in the decision group.

No. Both Class Members and Post-Class Applicants can choose to be in forbearance until they get a discharge or a decision.

The Department will hold class members in forbearance or stopped collection status, without any accrual of interest, either until the class member receives their settlement relief or, in the case of members of the decision group, until a decision denying their application becomes final. For Direct Loans, this should be automatic, for commercially held FFEL loans, you may have to notify your lender that you are eligible for an administrative forbearance based on borrower defense.

If you are in the automatic discharge group, you will receive your discharge and refund within one year of the Effective Date of the settlement agreement. Currently, the settlement is set to take effect on January 17, 2023.

If you are in the decision group and you are determined to be eligible for relief (based either on your original application or upon resubmission), you will receive your discharge and refund within one year of receiving written notice of the approval of your application.

If you previously consolidated your federal student loans into a Direct Consolidation Loan or a FFEL Consolidation Loan (which allow you to combine multiple federal loans into one), then you will still get the settlement relief to which you would otherwise be entitled if you hadn’t consolidated. You can see whether you have a Direct Consolidation Loan or FFEL Consolidation Loan by logging into your account with Federal Student Aid or your federal loan servicer.

If you consolidated loans from more than one school into a Direct Consolidation Loan or FFEL Consolidation Loan, and your borrower defense application relates to only one (or less than all) of those schools, then any settlement relief you receive will apply to the portion of your consolidation loan that relates to the school(s) named in your borrower defense application(s). The Department of Education should have data that will allow them to determine what part of your consolidation loan is connected to the school(s) for which you applied for borrower defense and are receiving settlement relief. Also, please note that you may be eligible for President Biden’s student loan debt cancellation ($10,000 or $20,000) to be applied to the portion of any Direct Consolidation loan that isn’t covered by the Sweet settlement.

Unfortunately, FFEL loans, including FFEL Consolidation loans, are not eligible for Present Biden’s loan cancellation plan at this time, unless you applied for Direct Loan consolidation before September 29, 2022. Please see Federal Student Aid’s FAQs here.

If you previously consolidated your federal student loans into a private consolidation loan – for example, with a lender such as SoFi, Earnest, or CommonBond – then unfortunately, that loan will not be eligible for Sweet settlement relief. The Department of Education does not have the legal authority to discharge loans that are currently held by a private lender, even if those loans were originated as federal loans. You will not get a refund on the amount you refinanced into a private loan, and you will still have to pay your private lender.

Yes, FFEL and FFELP loans are considered federal student loans and are addressed by the settlement. If you are class member entitled to relief through the settlement, any FFEL and FFELP loans that were the subject of your BD claim(s) will be canceled. However, you may not be entitled to a refund of payments made on your FFEL(P) loans.

There are two types of FFEL loans: some are held by the government, and some are held by private bank lenders. Loans held by private bank lenders are known as “commercially held FFELs.”

Although both are technically considered federal loans, payments that you made on commercially held FFEL loans will not be included in any refund you receive under the Sweet settlement, because the Department of Education does not have the legal authority to refund payments made to commercial lenders.

If you previously consolidated your federal loans, including any FFELs, into a Direct Consolidation Loan, then you will get a refund of any payments you made after that consolidation toward the loans that are the subject of your borrower defense application. The Department of Education will make this calculation when it issues refunds.

Please note that some companies service multiple kinds of loans. For example, Navient can service Direct, FFEL, and/or private loans. Therefore, only knowing that you have loans with Navient (or another servicer) is not an indication of the type of loans you have.

If you’re unsure whether you have Direct or FFEL loans, or whether your FFEL loans are commercially held, please visit the National Consumer Law Center’s Student Loan Borrower Assistance page for helpful resources on figuring out what kind of loans you have. If you want to find out who your federal loan servicer is, click here. If you’re unsure if your loans are private, you can call your servicer and ask, or you can cross reference your credit report with your Federal Student Aid (FSA) information.

• Members of the automatic relief group will receive notice that they are entitled to full settlement relief within 90 days of the effective date of the settlement.

  Post-Class Applicants will get notice informing them of their status as Post-Class Applicants and the provisions of the Agreement that apply to them within 120 days of the effective date.

  Members of the decision group will receive a decision letter when their application has been evaluated, according to the timeframe set out in the settlement.

  Remember to update your contact information with FSA to ensure that you receive your notice!

• Under the settlement, the Department of Education has agreed to rescind all borrower defense denials that it issued between December 2019 and October 2020. If you received a form denial notice during that time period, it will no longer be considered valid. The Department will treat your original application as if it had never been denied, and you will become part of either the automatic discharge group or the decision group, depending on the school(s) to which your application relates. You do not need to submit another application or any other materials.

  Form denial notices will be rescinded for the entire class, regardless of whether you are in the automatic discharge group or the decision group.

• No. Under the settlement, the Department has committed to taking all steps necessary to deliver settlement relief. Class members and Post-Class Applicants will not have to consolidate their loans or take any other steps to receive the relief they are entitled to.

• The settlement allows the Plaintiffs to ask the court to enforce the settlement agreement in the event that the Department violates it in certain ways. For instance, if the Department fails to issue relief within the required time periods or fails to provide timely decisions to decision group members and then doesn’t issue automatic relief, Plaintiffs can ask the court to force the Department to do those things on a schedule set by the court. Plaintiffs can also go to the court if the Department engages in any involuntary collection activity against class members when they are supposed to be in forbearance/stopped collection status.

  Class members in the decision group who receive denials of their borrower defense applications will also have the right to challenge those denials in court, on the basis that the explanation of the denial was inadequate and/or on the basis that the denial was wrong on the merits.

• If you are a parent borrower, and you applied for borrower defense to repayment of a Parent Plus loan on or before June 22, 2022, your application is included in the class. If you applied for borrower defense for a Parent Plus loan after June 22, 2022, and before November 16, 2022, you are a Post-Class Applicant.

• Individuals who applied for borrower defense for their Corinthian-related loans will have their loans discharged through the Corinthian group discharge process announced by the Department of Education on June 1, 2022. These class members will receive the same relief as other class members in the automatic discharge group (full discharge, refunds of payment to the Department, and deletion of the credit tradeline), but they will receive their relief according to a different schedule.

• If you attended one of these schools before Corinthian ownership, and applied for borrower defense on or before June 22, 2022, your application will be placed into the decision group, and you will receive a decision within the applicable time frame. If you applied for borrower defense after June 22, 2022, but before November 16, 2022 (the date of final approval of the settlement), you are a Post-Class Applicant.

• Borrowers who applied as Post-Class Applicants will have the credit tradelines for their discharged loans deleted from their credit reports if their borrower defense applications are approved. Post-Class Applicants will not automatically get refunds if their applications are approved, but they might get refunds depending on their individual circ*mstances. In general, the Department of Education applies a statute of limitations to decide whether a successful borrower defense applicant will get a refund along with discharge. The Department agreed that the limitations period would not apply to class members, but it will apply to Post-Class Applicants. Whether a Post-Class Applicant gets a refund will therefore depend on the facts in their application.

• The automatic discharge list consists of schools that, for purposes of this settlement, the Department of Education determined had strong indicia regarding substantial misconduct, whether credibly alleged or in some instances proven, and had a high rate of class members with applications related to those schools. The absence of a school from the automatic discharge list does not necessarily mean that that school has been “cleared” of any allegations of misconduct, or that misconduct will not be discovered or substantiated in the future. The Department of Education will still assess your claim that your school committed misconduct under the applicable borrower defense standards, either under the settlement or under the relevant regulations (as applicable).

• Yes, you can apply for borrower defense in relation to any federal student loan that has already been disbursed.

• No, you cannot get credit towards PSLF if you are in borrower-defense-related administrative forbearance. If you want to keep making qualifying payments toward PSLF, you can opt out of administrative forbearance by contacting your loan servicer and telling them that you want to resume payments under a qualifying PSLF payment plan. If you end up receiving Sweet relief before your PSLF is granted, you should receive a refund of any amounts paid to the Department of Education toward Direct or Direct Consolidation loans, including a refund of prior qualifying PSLF payments. (This does not include refunds of payments on commercially held FFEL loans.)

• No. The Biden administration’s recent announcement of broad-based loan cancellation will not change your entitlement to relief under the settlement. This is true even if the Biden cancellation would cover your entire loan balance.

• No, the Department of Education’s recent announcements about ITT and Westwood students receiving cancellation of their federal student loans do not change the relief that Sweet class members who attended those schools will receive. Because ITT and Westwood are both on the settlement agreement’s Exhibit C list, you are still considered part of the automatic discharge group if you attended one of those schools and are a Sweet class member (that is, if you applied for borrower defense on or before June 22, 2022, and your application was pending, or you had received a form denial as of that date). As a class member, you will still receive full discharge of your ITT or Westwood loans and a refund of amounts you previously paid to the Department on those loans, along with removal of those loans from your credit report.

• No, the settlement does not apply to Perkins loans. If you have both Perkins loans and Direct and/or FFEL loans, you are only eligible for settlement relief on your Direct and/or FFEL loans.

• The certified class in Sweet v. Cardona, which was defined by a court order in October 2019, consists of individuals who (among other things) “have asserted a borrower defense to repayment to the Department [of Education].” In other words, the class includes people who had already filed for borrower defense. When the parties signed the settlement agreement on June 22, 2022, they were agreeing to resolve the claims of everyone who was included in the class definition at that point. The settlement agreement contains separate provisions for Post-Class Applicants to ensure that the conduct by the Department of Education that Plaintiffs alleged in this lawsuit do not recur for those who applied shortly after the settlement was signed.

• The short answer is yes, in most cases. If you are a class member and you are entitled to receive a refund under the settlement, that refund will include all amounts you paid to the Department of Education on the loans that are the subject of your borrower defense application, including on loans that are fully paid off. There are some exceptions, however, which are detailed below.

  If you are in the automatic discharge group, you will receive a refund of all amounts you paid to the government. This includes amounts you paid on Direct Loans, Direct Consolidation Loans, and Department-held FFEL loans, even ones that are fully paid off at the time relief is issued. Your refund will not include amounts paid on commercially held FFEL loans (whether or not they are fully paid off). For more information on how to determine what kind of loans you have, visit the National Consumer Law Center’s Student Loan Borrower Assistance help page. If you want to find out who your federal loan servicer is, click here. If you’re unsure if your loans are private, you can call your servicer and ask, or you can cross reference your credit report with your Federal Student Aid (FSA) information.

  If you are in the decision group and the Department of Education determines that you are entitled to settlement relief per their streamlined procedures, then you will receive a refund in the same manner as the automatic decision group.

  Additionally, if you are in the decision group and you do not get a decision within the timeline that applies to your application, then you will receive a refund in the same manner as the automatic discharge group.

  If you paid off your federal student loans by refinancing into a private lender (such as SoFi, Earnest, or CommonBond), you will not get a refund on the refinanced amount, and you will still have to pay your private lender.

• If you have a pending borrower defense applications—regardless of whether you are a Sweet class member, a Post-Class Applicant, or applied after the final approval date—you are entitled to request a forbearance (a pause on making your payments) in relation to the federal loans (both Direct and FFEL, including commercially held FFEL) that are the subject of your borrower defense application.

  Contact your servicer and specifically request a forbearance based on your pending borrower defense application. To find out who your federal loan servicer is, click here.

  To be clear, neither the Sweet case, nor applying for borrower defense in relation to your federal loans, will impact any private loans you may have from the school for which you applied for borrower defense.

• The current COVID payment pause has been extended because of the ongoing lawsuits regarding the Biden administration's plan to cancel $10,000 to $20,000 of federal student loan debt for qualifying borrowers. The Supreme Court is scheduled to hear arguments in that litigation in February or March 2023, and a decision is expected on or before June 30, 2023. The COVID payment pause will end, and repayment will begin, 60 days after the Supreme Court's decision; or, if the Court does not issue a decision by June 30, 2023, the COVID payment pause will end 60 days after that date (September 1, 2023). For more details, please see the Department's most recent announcement here.

  Neither the COVID payment pause nor the Sweet litigation can prevent interest from accruing on commercially held FFEL or private loans. However, if the settlement is approved, and you are either in the automatic discharge group or in the decision group and you are granted relief, any accrued interest on your commercially held FFEL loans will be discharged. The Sweet settlement does not affect private loans. If you’re not sure whether you have commercially held FFEL or private loans, you can call your servicer and ask, or you can cross reference your credit report with your Federal Student Aid (FSA) information.

  After the COVID payment pause end date, you may see interest appear on your federal Direct Loans or Department of Education-held FFEL loans. After that date you may see interest appear on your federal Direct Loans or Department of Education-held FFEL loans. This is due to internal Department of Education processes. If you are a class member, this interest will all be discharged if and when you receive settlement relief. If you are a decision group member whose application is ultimately denied, any accrued interest will be removed from your account before you return to repayment.

• The Sweet settlement does not reinstate GI benefits applied to attend the school that was the subject of your borrower defense application.

  The U.S. Department of Veterans Affairs has information on the restoration of benefits after school closure, or if a school is disapproved for GI Bill benefits, here.

• First, you do not have to consolidate any of your loans in order to receive Sweet relief. If anyone tries to tell you otherwise, it is a scam.

  If you want or need to consolidate your current federal loans for another reason, you can consolidate into a Federal Direct Consolidation Loan. Federal consolidation will not change the relief you are eligible for under the Sweet settlement.

  Please be aware, however, that if you apply to consolidate a FFEL loan into a Direct Consolidation Loan after September 29, 2022, it may affect the eligibility of your Direct Loans for President Biden’s loan cancellation. Please see Federal Student Aid’s FAQs here.

  Consolidating any federal loans into a private loan (with a lender such as SoFi, Earnest, or CommonBond or, for example, a private loan with Navient) will make you ineligible for any Sweet or other Department of Education loan relief.

• To ensure that you continue to receive timely information about the settlement, please update your contact information in your Federal Student Aid (FSA) profile. Log in to your account and navigate to the “Settings” page under your email address, phone number, or address. This is how the Department of Education will determine where to send you information and any potential refunds. For more information, visit the FSA’s help center page on this matter.

  You should also make sure to keep your servicer up to date regarding your contact information. If you’re not sure who your servicer is, this FSA webpage explains and helps you identify your servicer.

• PPSL is aware of this issue, and we have raised it with the Department of Education. We want to know more. If you applied for borrower defense but have had trouble tracking your application, or have experienced errors in the Department’s record-keeping, please let us know about your experience here. Your responses will help us ensure that every borrower who applied for BD is confirmed in the correct class status.

• PPSL is aware of the problems with the BD application website, and we have raised this concern with the Department of Education. We want to know more. If you had trouble with the online BD application, please let us know about your experience here. Your responses will help us ensure that every borrower who started their application on or before June 22, 2022, is counted as a class member, and that every borrower started their application between June 22, 2022 and November 15, 2022 is counted as a Post-Class Applicant.

• Some class members may currently be receiving assistance from SNAP/FoodStamps, Social Security or similar public benefits programs. If you are getting public assistance and you receive a refund, you should be aware that the refund may impact your eligibility for benefits. Eligibility is different depending on the type of benefits you receive, whether it is state or federal, and which state you live in.

    You can visit the National Academy of Elder Law Attorneys (NAELA) for assistance. NAELA attorneys, although specializing in legal issues for those who are 65 and older and/or are disabled, have experience in and information on how refunds like this can affect eligibility for public assistance.  Lastly, you can look here to find your local legal aid office.

• The current COVID payment pause has been extended because of the ongoing lawsuits regarding the Biden administration's plan to cancel $10,000 to $20,000 of federal student loan debt for qualifying borrowers. The Supreme Court is scheduled to hear arguments in that litigation in February or March 2023, and a decision is expected on or before June 30, 2023. The COVID payment pause will end, and repayment will begin, 60 days after the Supreme Court's decision; or, if the Court does not issue a decision by June 30, 2023, the COVID payment pause will end 60 days after that date (September 1, 2023). For more details, please see the Department's most recent announcement here.

  The COVID payment pause does not apply to commercially held FFEL loans.

  If you are a class member (in the automatic discharge or decision group) you will not owe any interest for the period between final approval and the date you receive your discharge or final decision. During that time, you may see interest appear on your account. This is due to internal Department of Education processes. Any interest that appears during this time will ultimately be removed even if, for decision group class members, your borrower defense is eventually denied.

  If you are a Post-Class Applicant, interest will accrue on your loans while you await a decision. If your borrower defense application is ultimately approved that interest will be discharged. If your application is denied the interest will remain on your account.

• If you receive relief under the settlement, your refund will include any amounts the Department garnished from your wages and/or took from your income tax refunds in connection with the loans that were the subject of your borrower defense application.

• If you are a Sweet class member, you should not have to pay any federal income taxes on your loan discharge from the Sweet settlement. Under the American Rescue Plan Act of 2021, all student loan discharges are federally tax-free until 2025. That includes discharges under this settlement. However, if your loans are discharged after January 1, 2026, even pursuant to the Sweet settlement, there may be federal income tax implications and you should consult with a tax advisor, unless Congress extends the tax exemption beyond 2025.

  If you are a Post-Class Applicant and you receive student loan cancellation through the borrower defense process after January 1, 2026, your discharge should still be federally tax-free under IRS Revenue Procedure 2015-57, which provides that the IRS will not assert that federal student loans discharged under the borrower defense to repayment process qualify as recognizable gross income. As always, you should consult with a tax advisor.

  State income tax policies with respect to student loan discharges may vary. If you have questions about state income taxes, we recommend that you seek out resources from your state of residence and contact a tax advisor.

• The class is represented by two non-profit legal services organizations that provide free legal services, the Project on Predatory Student Lending and Housing & Economic Rights Advocates.

• We believe the settlement is in the best interest of Class Members, who after years of government inaction will finally have their borrower defense claims resolved—and a large majority of the class will automatically be granted full relief. Settling the case provides relief to the class that, in our judgment, is consistent with what Class Members might reasonably expect to achieve if we followed the litigation through to trial, while avoiding any further delay and risk of litigation.

• You should complete the form in the Get Help tab at the top of the webpage. If you cannot fill out the form, you may call 617-390-2574. Please note, we cannot provide individual legal advice. We receive a large number of calls and emails, and our response may be delayed.

• Important filings, including the complaint and the order certifying the class, are posted on our case page.

We do not have information about what the Department of Education is doing with individual borrower defense applications or what may be happening with your specific loans. For all questions about the individual status of your borrower defense, you should call the Department of Education’s Borrower Defense Hotline to ask about the status of your application at 1-855-279-6207 between 8 AM and 8 PM eastern time.

• Our soon-to-come Borrower Defense FAQ will provide information about what to do while you are waiting for a borrower defense decision, credit reporting, repayment options, and more. Stay tuned!

• If you have questions that are not answered by this webpage or by our Borrower Defense FAQ webpage please use the form linked below. Please note, we can only respond to questions about this case and will not respond to requests for individual legal or repayment advice. We receive a large number of calls and emails, and our response may be delayed.