Student Borrowers Respond to Institutions’ Attempts to Intervene in Borrower Defense Settlement | Press Release
“That the very companies who caused such harm would intervene at the eleventh hour to further deny justice to their former students is extremely disappointing, though not surprising.”
BOSTON – Today, student borrowers filed a brief in the lawsuit Sweet v. Cardona, in response to colleges’ motions to intervene in the proposed joint settlement agreement that, upon court approval, will immediately approve the borrower defense applications of approximately 200,000 individuals and cancel at least $6 billion in federal student loans. In today’s filing, borrowers argue that these companies do not have legal standing to intervene in the case and that further delays would cause significant harm to class members.
The class members include 200,000 borrower defense applicants who borrowed to attend certain schools, which are listed in an attachment to the settlement and can be viewed here. The Department of Education has identified common evidence of institutional misconduct by these schools and determined, based on that evidence, that an applicant’s attendance justifies presumptive relief. All of the schools that seek to intervene in this case are included on the Department’s list: Lincoln Educational Services Corporation (“Lincoln”), American National University (“ANU”), Everglades College, Inc. (“ECI”), and the Chicago School of Professional Psychology (“CSPP”).
A hearing on the proposed settlement is currently scheduled for August 4, 2022 in the United States District Court for the Northern District of California.
“These predatory schools were all too happy to deceive borrowers and collect federal student loan dollars, then sat on the sidelines as their former students fought through a years-long litigation process to secure the debt cancellation they are legally owed,” said Eileen Connor, Director of the Project on Predatory Student Lending. “That the very companies who caused such harm would intervene at the eleventh hour to further deny justice to their former students is extremely disappointing, though not surprising. These meritless claims should be rejected and the proposed settlement should move forward as planned so that borrowers can finally move on with their lives.”
Today’s filing further states: “Class Members have been waiting years for a resolution of their BD claims — indeed, that was the original impetus for this lawsuit when it began in 2019. Allowing Movants to intervene in the litigation at this late stage, with the apparent intention of blowing up a hard-fought and long-awaited settlement on deficient legal grounds, would impose severe hardship on the class.”
The filing includes several comments from Class Members, demonstrating the urgency of moving this settlement forward:
“I have been waiting for an answer about my student loan forgiveness application since May 15, 2019, but have not heard anything yet. . . . The reason for me reaching out is because I am in the process of purchasing a home and (long story short) have been denied for the last 3 years. I have been denied because of my $45,000 student loan debt I have due to the deception from the University of Phoenix. . . . Because of the Sweet v. Cardona case, the lenders are now considering providing me and my family with a home loan. The last thing they are asking for is for some form of documentation stating that I am a part of the Sweet v. Cardano [sic] case and that my loans will be forgiven once the settlement is completed.”
“I cannot afford to work in this field and was lied to multiple times about the program, job expectations and income expectations. . . . I submitted these lies with my application years ago. I cannot get a loan for a home for my children and I cannot get a loan for a car without a co-sign. This one for profit school has ruined my life and my children’s lives. I’ve lost job prospects due to credit checks and I’ve contacted DOE multiple times to get any status update on my application with no answers. I don’t know what else to do.”
“I have worked extremely hard to not have any luxuries in my life or start a family to make sure I can afford these [loans] (I eat little, have never owned a car). I was told by financial aid collectors when payments were late that I need to eat less to afford my loans. I receive many harassing phone calls asking for more, but I’ve never been able to afford more. I’ve worked hard to not default because I fear they would go after my mother’s assets, as I don’t own a home or car and have assets and she’s a co-signer, with a very low income.”
“Our clients have been waiting years for justice and this settlement has the potential to make a life-changing difference for tens of thousands of people and their families,” said Joe Jaramillo, Senior Attorney at HERA. “Throughout this arduous legal battle, our clients continued to speak out and demand that the government make final decisions on borrower defense applications so that students fraudulently induced into federal loans by predatory schools can have those loans cancelled. We cannot allow those same schools to intervene with such meritless claims and delay justice even further.”
Sweet v. Cardona (previously DeVos) Case Background:
Seven students brought this lawsuit against then-Secretary DeVos’ Department of Education in June 2019. At the time, the Department of Education had halted all processing of borrower defense claims and refused to adjudicate any borrower defense from any student for well over a year.
Immediately after filing the lawsuit, the students asked the court, in a motion for class certification, to let them represent all other borrowers whose borrower defense claims for loan cancellation had stalled. The motion included almost 900 affidavits from students describing the harm that the Department’s inaction had caused – with 96% saying their lives were made worse by attending their school. In October 2019, the court certified the class of over 200,000 borrowers with pending claims. Many had been pending for years.
After a proposed settlement agreement was filed in spring of 2020, the Department of Education sent out tens of thousands of blanket denials of borrower defense claims. Many of these form letters denied relief due to a “lack of evidence,” despite the extensive evidence submitted, even in cases where other government enforcement agencies had found fraud. After a historic hearing held on Zoom and attended by over 500 student borrowers in fall of 2020, the judge found the Department of Education was not acting in good faith by sending out blanket denials and rejected the proposed settlement.
The judge also ordered discovery, allowing lawyers for the student borrowers in this case to obtain documents and to depose officials at the Department of Education. A review of these documents and depositions revealed alarming evidence that the U.S. Department of Education created a sham process designed to deny borrowers debt relief regardless of evidence. In March 2021, student borrowers filed a supplemental complaint citing this new evidence.
In February 2022, the U.S. Court of Appeals for the Ninth Circuit overruled the district court’s order allowing the student borrowers to depose former Secretary DeVos. Also in February 2022, borrowers filed a new brief in the lawsuit expressing frustration with the lack of action by the Department.
On June 23, a joint proposed settlement was filed with the court. Two weeks before the scheduled hearing on preliminary approval, four institutions — Lincoln Educational Services Corporation (“Lincoln”), American National University (“ANU”), Everglades College, Inc. (“ECI”), and the Chicago School of Professional Psychology (“CSPP”) (together, “Movants”) — filed motions to intervene in this case to register their disagreement with the proposed settlement. Borrowers responded on July 25, 2022.
The court will hold a fairness hearing on the settlement on August 4, 2022.
The borrowers are represented by the Project on Predatory Student Lending and Housing and Economic Rights Advocates (HERA).
About the Project on Predatory Student Lending
Established in 2012, the Project on Predatory Student Lending represents more than one million former students of predatory for-profit colleges. Its mission is to litigate to make it legally and financially impossible for federally-funded predatory schools to cheat students and taxpayers. The Project has brought a wide variety of cases on behalf of former students of for-profit colleges. It has sued the federal Department of Education for its failures to meet its legal obligation to police this industry and stop the perpetration and collection of fraudulent student loan debt.
About HERA
Housing and Economic Rights Advocates (HERA) is a California statewide, not-for-profit legal service and advocacy organization dedicated to helping Californians — particularly those most vulnerable — build a safe, sound financial future, free of discrimination and economic abuses, in all aspects of household financial concerns. It provides free legal services, consumer workshops, training for professionals and community organizing support, creates innovative solutions and engages in policy work locally, statewide and nationally.###