Judge Alsup Blasts Department of Education on Borrower Defense Settlement
Court sets a strict schedule to ensure accountability from ED and servicers to complete overdue relief in the $6 billion borrower defense settlement
San Francisco – At a hearing today on the Plaintiffs’ motion to enforce implementation of settlement relief in the borrower defense lawsuit Sweet v. Cardona, Judge William Alsup expressed disappointment in the Department of Education’s gross mishandling of settlement relief and set a strict schedule with accountability measures to ensure that the overdue relief is delivered by August 31, 2024.
The hearing and motion to enforce came after the Department of Education failed in its obligation to comply with the $6 billion borrower defense settlement. The Department had a year to deliver settlement relief to 196,000 borrowers who are entitled to discharges, refunds, and credit repair under the settlement, yet tens of thousands of borrowers still had not received their settlement relief by the deadline of January 28, 2024. According to the Department’s submissions to the court, at least 49,000 class members still have not received full relief as of today.
Judge Alsup criticized the government’s failure to deliver full settlement relief on schedule and expressed concern for impacted borrowers who expected relief yet are still receiving bills from their servicers for debts that should have been cancelled. Alsup reluctantly accepted the Department’s request to extend the deadline for delivering full relief to August 31, 2024, but imposed strict parameters to ensure accountability, including:
Three meetings with Judge Alsup to report progress and ensure that relief is on track, scheduled for May 23, June 13, and July 11. Servicers must attend along with representatives from the Department of Education and Plaintiffs’ counsel.
Mandated biweekly meetings to be held in person at the Department of Education, to be attended by all parties, including servicers.
A designated point of contact at the Department of Education for class members to direct questions about the status of their relief. Class members who are having issues with settlement relief should contact ED directly through the student aid ombudsman at [sweet@ed.gov].l
“We share Judge Alsup’s concern for borrowers who are suffering as a result of the Department of Education’s failure to comply with a legally binding settlement,” said Eileen Connor, President and Executive Director of the Project on Predatory Student Lending. “It's time for the Department to stop their excuses and do what it takes to do right by class members. These delays were entirely avoidable and have kept tens of thousands of people from moving forward with their lives in real and meaningful ways. We look forward to these biweekly accountability meetings with the Department and servicers to ensure they comply with the settlement."
The Department’s missing the court-ordered deadline has caused hardship above and beyond what class members have already experienced.
The Department’s delays have a significant impact on borrowers:
“I am waiting for this to be removed from my credit report so I can move forward with purchasing a home. I am forced to rent at a higher amount due to this continued reporting. It’s costly and impacts my family significantly” — Amy Sewell, NH, Argosy University
“I'm very disappointed in the way the DOE and EdFinancial have handled this settlement. It's been so frustrating not knowing what I should be doing and disheartening watching the interest I worked so hard to pay down continue to climb again. I know I'm entitled to this discharge but it really scares me that they'll drag their feet for so long it'll never happen and I'll end up right back where I started because of this interest.” — Julie Sams, OH, Art Institute
“MOHELA is still trying to collect payment on this loan and has removed me from forbearance three different times since I was notified of the discharge via Sweet v Cardona. This constant battle to keep this student loan disaster from damaging my credit rating is exhausting, and stressful. This is an approved borrower's defense discharge and needs to be discharged as soon as possible.” — Kat Bowers, IL, University of Phoenix
“I was denied a home loan in February 2024 because of this on my credit report and had to have a co-signer for my car loan. I am being denied improvements to my life.” — Laney Twehous, AR
This entire experience has been a complete nightmare. I'll never forget how I was told that my credits would transfer and I would receive a job upon graduation. When graduation came there was no job and the devastation sunk in when I tried to transfer credits and nothing was accepted.... anywhere. Now here I am 22 years later with this massive loan and I'm about to start paying for my daughters' school. Somehow I still received emails from Navient trying to convince me to refinance my loans. How can this be legal? My wife and I are in a constant state of anxiety over these loans. — Jorge Macias, TX
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).
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 $16 billion 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.
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