Education Department removes 4 colleges from Sweet v. Cardona settlement list

Higher Ed Dive

Natalie Schwartz

September 28, 2022

Dive Brief: 

• The U.S. Education Department removed four colleges from its list of institutions whose students stand to receive automatic debt relief under a $6 billion settlement proposal, according to court documents.

• Last month, U.S. District Judge William Alsup granted preliminary approval of the settlement in the lawsuit Sweet v. Cardona, filed in 2019 by students who say the federal government didn’t properly handle their debt forgiveness claims after they were defrauded by their colleges. Upon final approval, around 200,000 borrowers will have their student loans forgiven.

• In the settlement, the Education Department included a list of 150-plus colleges whose students would receive relief automatically. Alsup allowed the department to remove four on Aug. 16 that the agency said it included by mistake. The department was also allowed to add one more that it said should have been on the list originally.

Dive Insight: 

The Sweet v. Cardona lawsuit was brought by students who say the Education Department has mishandled their claims under the borrower defense to repayment regulation, which grants debt relief to borrowers defrauded by their colleges. They said the Education Department delayed decisions on their claims, leaving them saddled with student loans.

As part of the proposed settlement, the Education Department named colleges whose students would receive automatic relief, arguing that these institutions are marked by “strong indicia” that they carried out misconduct or have high rates of borrower defense applications. Several of the listed colleges contested those arguments in court documents.

In the update to the list, the Education Department removed four colleges that were accidentally included “based on clerical errors,” it said in court documents. Those are ATI College, Missouri College of Cosmetology North, Hallmark University and International Technical Institute.

Joe Fisher, president of Hallmark University, said in an email that the institution learned about its inclusion on the list recently and began examining how it happened. Shortly afterward, university officials found the error was already being fixed.

“We are disappointed about the error but pleased it was identified and corrected,” Fisher said. Hallmark is a nonprofit in San Antonio that enrolled 923 students last year.

ATI College and the Missouri College of Cosmetology North, both for-profits, did not respond to requests for comment.

The Education Department’s settlement proposal listed Lincoln Educational Services as the corporate parent of International Technical Institute. But a spokesperson for the company said in an email that it does not own the institution and has never had an affiliation with it.

International Technical Institute closed in the early 1990s, according to the Education Department’s database of closed institutions.

Two other Lincoln-owned institutions are listed as covered by the Sweet v. Cardona settlement.

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