Judge approves Sweet v. Cardona student debt relief settlement, but likely appeal looms

Higher Ed Dive

Rick Seltzer, Senior Editor; Natalie Schwartz, Editor

November 17, 2022

A federal judge late Wednesday approved a massive class-action settlement intended to address allegations the U.S. Department of Education stonewalled hundreds of thousands of applications to a program that cancels student loan debts for borrowers whose colleges misled them.

U.S. District Judge William Alsup signed off on the agreement after taking a week to weigh final arguments in the three-year-old Sweet v. Cardona case. The case is about student debt relief that can be granted under the borrower defense to repayment program, which is separate from President Joe Biden’s wide-ranging initiative forgiving up to $10,000 or $20,000 in federal student loan debt for some 40 million borrowers — a $430 billion initiative that is tied up in different court cases.

Alsup’s decision sets the stage for the Education Department to automatically cancel debts for about 200,000 borrowers who attended 151 colleges, including shuttered large for-profit chains like ITT Technical Institute and still-operating institutions like Grand Canyon University. That would clear a total of about $6 billion in federal student loan debt.

The settlement agreement also calls for the Education Department to quickly make borrower defense to repayment decisions on debt cancellation for another 64,000 borrowers — or to discharge their debts if a decision can’t be reached within specific timeframes based on how long they’ve been awaiting a ruling. This is projected to result in $1.5 billion in loans being cleared.

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