Student Borrowers Score Another Win in $6 Billion Borrower Defense Settlement

The Ninth Circuit denied three intervening schools’ attempt to overturn the approved settlement 

SAN FRANCISCO – In the class action lawsuit Sweet v. Cardona, the Ninth Circuit has rejected an appeal by three intervening schools—Lincoln Educational Services Corporation, American National University, and Everglades College, Inc.—seeking to overturn the approved borrower defense settlement, which cancels $6 billion in student debt for more than 230,000 borrowers. 

On January 13, 2023, following approval of the settlement by the U.S. District Court for the Northern District of California, the three schools filed notices of appeal attempting to block the settlement. They also asked the District Court to stay the implementation of the settlement pending their appeals. Judge William Alsup denied the motion to stay in February 2023, allowing the Department of Education to move forward with implementation according to the settlement agreement. The intervenors then petitioned the Supreme Court of the United States in April 2023 for a stay of settlement implementation, which was also swiftly denied. 

This decision by the Ninth Circuit confirms that the intervenors lacked standing to challenge the settlement and that they had no protectable legal interest in the litigation. Meanwhile, since February 2023, nearly 200,000 class members have received full settlement relief.  

“This decision validates the fact that each of our clients is entitled to relief under this settlement and that desperate action by three educational companies cannot stop their long-awaited relief,” said Eileen Connor, President and Executive Director of PPSL. “We will continue to see this case through to the end, whether that means fighting meritless appeals or ensuring that the Department of Education and servicers do their jobs to deliver the relief that they legally owe our clients.”  

Case Background 

The settlement received final approval on November 16, 2022. Under court rules, there was then a window in which parties could appeal Judge Alsup’s ruling.  

On January 13, 2023, three schools (Lincoln Educational Services Corporation, American National University, and Everglades College, Inc.) filed notices of appeal attempting to block the settlement. They also asked the District Court to stay the implementation of the settlement pending their appeals. The District Court, the Ninth Circuit, and the Supreme Court all denied the intervenors’ request for a stay; the settlement thus went into effect with an official effective date of January 28, 2023. 

While Judge Alsup monitored the distribution of settlement relief by ensuring strict parameters for government accountability, the appeals proceeded on a separate track in the Ninth Circuit. On November 5, 2024, the Circuit denied the appeals by the intervenors.

For more information about Sweet v. Cardona and the settlement, visit our website. 

About the Project on Predatory Student Lending    

The Project on Predatory Student Lending (PPSL) is the leading legal organization representing student borrowers against predatory for-profit colleges and the policies that enable institutions to exploit and cheat students. PPSL uses bold, strategic litigation and advocacy to demand accountability in the higher education space and influence policy solutions to create a more just and affordable education system. PPSL represents more than one million student borrowers and its work has resulted in cancellation of more than $22 billion of fraudulent student loan debt.