Student Borrowers in Sweet v. Cardona Defend $6 Billion Borrower Defense Settlement in SCOTUS Brief
Intervenors, after being denied by two different courts, attempt to bypass legal procedure to prevent an important class-action settlement between the government and former students of for-profit colleges
BOSTON – In the class-action lawsuit Sweet v. Cardona, borrowers today filed a brief with the Supreme Court of the United States in response to a petition filed by three intervening institutions—Lincoln Educational Services Corporation, American National University, and Everglades College, Inc.—asking SCOTUS to stay the $6 billion borrower defense settlement and seeking to bypass the standard appeals process, which is set to begin in May in the Ninth Circuit.
Attempts to delay settlement by the three schools have already been denied twice, by Federal District Court Judge William Alsup and by the Ninth Circuit Court of Appeals. Accordingly, the Department of Education has begun discharging loans under the terms of the approved settlement and may continue to do so unless and until the Supreme Court directs otherwise.
Statement from Eileen Connor, President and Director of the Project on Predatory Student Lending:
“These three institutions have never once shown that they have standing in this case or would be harmed by this settlement, and in fact have been denied twice, by two different courts, in their efforts to prevent class members from realizing the benefits of the settlement. Their petition to SCOTUS is a desperate attempt to bypass the normal appellate process. The schools set their sails to catch political headwinds by falsely equating the settlement of long-standing and hard-fought litigation with a completely distinct program of broad-based debt cancellation that is currently under review by the Supreme Court. To compare this to a broad-based administrative action under the HEROES Act that would touch 40 million people is an attempt by three schools to distort reality.
This case was brought in 2019, and involves 290,000 borrowers who have submitted detailed borrower defense applications under penalty of perjury, citing the reasons their loans should be discharged under the law, and the Department of Education failed to issue timely and lawful decisions on those applications.
It's unfortunate that people who have been waiting for so long to simply have their legal rights recognized are now being caught up in political and ideological agendas that have nothing to do with them. We will continue fighting alongside our clients to see this case through to the end.”
The brief filed today further details:
The intervenors argue that the government had no statutory authority to settle the borrowers claims against it. By settling this lawsuit, they contend, the Secretary is claiming the power to cancel, en masse, every student loan in the country. But the Secretary has made no such claim. Unlike Nebraska and Brown, this case does not involve a blanket loan cancellation program; it involves the settlement of specific claims brought by specific borrowers in a hard-fought lawsuit. It does not, therefore, rely on any extraordinary assertion of power. It relies on the ordinary authority of the Attorney General to settle claims against the United States.
A settlement was necessary in this case because through discovery, the plaintiffs confirmed that, following its eighteen-month refusal to adjudicate borrower defense applications at all, the Department had implemented numerous policies that ensured the vast majority of applications would be summarily denied. The record showed that if not for this settlement, the Department would not have the capability to clear the backlog for over twenty-five years.
The district court approved the settlement after a fairness hearing, and not one of the hundreds of thousands of class members objects. Yet three of the 151 schools whose former students comprise less than 1.5% of the class seek to block the entire settlement.
Before the settlement, these three schools had all been the subject of law-enforcement investigations, highly publicized consumer-protection lawsuits, and multi-million-dollar settlements.
Two of the three applicants in this Court are for-profit colleges. Although formerly a for-profit college, Everglades is currently purporting to operate as a non-profit. But a House Education Committee probe suggested that its non-profit status is dubious.
There is no prospect that this Court (or any court) will reverse the district court’s settlement approval because the intervening schools lack Article III standing to challenge it. The intervenors cannot possibly demonstrate that they have suffered a concrete harm that is both traceable to the settlement and that would be redressed by overturning its approval.
The Biden administration also filed its own response separately, which can be found here.
Sweet v. Cardona (previously Sweet v. DeVos) was filed in the United States District Court for the Northern District of California in 2019 by seven named plaintiffs, on behalf of themselves and all federal student loan borrowers whose borrower defense claims for loan cancellation were being ignored by the Department of Education. The plaintiff class includes approximately 290,000 class members who make up the current borrower defense backlog.
For more details on the settlement, visit the FAQ on our website.
The borrowers are represented by the Project on Predatory Student Lending (PPSL) and Housing and Economic Rights Advocates (HERA). Gupta Wessler PLLC joined PPSL and HERA as counsel of record on the Supreme Court brief.
About the Project on Predatory Student Lending
Established in 2012, the Project on Predatory Student Lending represents over a million former students of predatory for-profit colleges. Its mission is to use litigation to eliminate predatory practices in higher education, and to relieve current and future borrowers from fraudulent student loan debt. PPSL has won landmark cases to protect borrower rights, recover money owed, and cancel more than $10 billion in fraudulent debt. Its ongoing cases hold predatory colleges accountable and force the U.S. Department of Education to act on behalf of students and stop protecting this insidious industry.
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.
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