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Are You One of These Students That Will Have Their Federal Student Loans Forgiven And Get All Payments Back?

The Department of Education has agreed to settle a case that began under the Trump Department of Education on June 25, 2019. The settlement is just awaiting Court approval.

In that case, the Department of Education was accused of unreasonably delaying and withholding decisions on Borrower Defense to Repayment claims submitted by federal student loan debtors.

Debtors included in this settlement include “all people who borrowed a Direct Loan or FFEL loan to pay for a program of higher education, who have asserted a borrower defense to repayment to the Department, whose borrower defense has not been granted or denied on the merits, and who is not a class member in Calvillo Manriquez v. DeVos, No. 3:17-cv-7210 (N.D. Cal.). See ECF No. 46 (Oct. 30, 2019).”

The mutually agreed settlement agreement says “No later than one year after the Effective Date, Defendants will effectuate Full Settlement Relief for each and every Class Member whose Relevant Loan Debt is associated with the schools, programs, and School Groups listed in Exhibit C hereto. If any such Class Member receiving relief under this Paragraph IV.A previously received a Form Denial Notice, the provision of Full Settlement Relief will be deemed to rescind that Form Denial Notice.”

If your loans are included in this settlement, you will be notified “no later than 90 calendar days after the Effective Date. The notice shall specify that the Class Member will receive Full Settlement Relief, as defined in this Agreement, and need not take any additional action to receive this relief. The notice shall also specify that the Class Member’s Relevant Loan Debt will remain in forbearance or stopped collection status pending the effectuation of relief. If the notice is sent by email and it bounces back, Defendants will have an additional 90 calendar days to send the notice by first class mail to the last known mailing address.” – Source

If you are found to be a member of people that previously submitted Borrower Defense claims, not only will your Federal student loans be forgiven, but you will receive full settlement “including the original principal of the affected federal student loan(s) plus any and all interest and fees that accrued or were incurred on that loan; (ii) a refund of all amounts previously paid to the Department toward their Relevant Loan Debt, including Relevant Loan Debt that was fully paid off at the time relief is granted; and (iii) deletion of the credit tradeline associated with the Relevant Loan Debt.” – Source

List of Schools and Programs Included (Exhibit C)

Westwood College
American Commercial College
American National University
Anamarc College
Anthem College
Anthem Institute
University of Phoenix
Western International University
ATI Career Training Center
ATI College
ATI College of Health
ATI Technical Training Center
Marinello School of Beauty
Berkeley College
Ashford University
University of the Rockies
Capella University
American InterContinental University
Briarcliffe College
Brooks College
Brooks Institute
Collins College
Colorado Technical University
Gibbs College
Harrington College of Design
International Academy of Design and Technology
Katharine Gibbs School
Le Cordon Bleu
Le Cordon Bleu College of Culinary Arts
Le Cordon Bleu Institute of Culinary Arts
Lehigh Valley College
McIntosh College
Missouri College of Cosmetology North
Pittsburgh Career Institute
Sanford‐Brown College
Sanford‐Brown Institute
Brown College
Brown Institute
Washington Business School
Allentown Business School
Western School of Health and Business Careers
Ultrasound Diagnostic Schools
School of Computer Technology
Al Collins Graphic Design School
Orlando Culinary Academy
Southern California School of Culinary Arts
California Culinary Academy
California School of Culinary Arts
Pennsylvania Culinary Institute
Cooking and Hospitality Institute of Chicago
Scottsdale Culinary Institute
Texas Culinary Academy
Kitchen Academy
Western Culinary Institute
Center for Employment Training
California College San Diego
CollegeAmerica
Independence University
Stevens‐Henager
Court Reporting Institute
La’ James College of Hairstyling
La’ James International College
American Career College
American Career Institute
McCann School of Business & Technology
Miami‐Jacobs Career College
Miller Motte Business College
Miller‐Motte College
Miller‐Motte Technical College
Tucson College
American University of the Caribbean
Carrington College
Chamberlain University
DeVry College of Technology
Devry Institute of Technology
DeVry University
Keller Graduate School of Management
Ross University School of Veterinary Medicine
Ross University School of Medicine
Argosy University
The Art Institute
Brown Mackie College
Illinois Institute of Art (The)
Miami International University of Art & Design
New England Institute of Art (The)
South University
Western State University College of Law
All‐State Career School
Fortis College
Fortis Institute
Career Point College
Empire Beauty School
Everglades University
Keiser University
FastTrain
Globe University
Minnesota School of Business
Bauder College
Kaplan Career Institute
Kaplan College
Mount Washington College
Purdue University Global
Grand Canyon University
Arizona Summit Law School
Charlotte School of Law
Florida Coastal School of Law
Florida Career College
United Education Institute
ITT Technical Institute
Gwinnett College
Medtech College
Radians College
Walden University
Florida Technical College
National University College
NUC University
Concorde Career College
Concorde Career Institute
International Technical Institute
Lincoln College of Technology
Lincoln Technical Institute
Daymar College
Wright Business School
Wright Career College
American College for Medical Careers
Branford Hall Career Institute
Hallmark Institute of Photography
Hallmark University
Harris School of Business
Institute for Health Education (The)
Micropower Career Institute
Suburban Technical School
Salter College
Beckfield College
Blue Cliff College
Dorsey College
Remington College
Southern Technical College
Star Career Academy
Sullivan and Cogliano Training Centers
Chicago School of Professional Psychology
Court Reporting Institute of St Louis
Vatterott College
Robert Fiance Beauty Schools
Robert Fiance Hair Design Institute
Robert Fiance Institute of Florida
Wilfred Academy
Wilfred Academy of Beauty Culture
Wilfred Academy of Hair & Beauty Culture
Brightwood Career Institute
Brightwood College
New England College of Business and Finance
Virginia College

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Proposed Notice Students Will Receive

Internal Name: BD Sweet v. Cardona – General Notification
Internal Number: 01 Subject if sent electronically: Notice of Proposed Class Action Settlement – Important borrower defense information for you

[DATE]
Borrower Defense Application #: [Case Number]

Dear [Primary Contact Name]:

Your rights may be affected, please read carefully.

You filed a borrower defense application asking the U.S. Department of Education (“Department”) to cancel some or all of your federal student loan debt because you allege the school you (or your child) attended engaged in unlawful conduct. We write to inform you that there is a proposed settlement in a class action lawsuit that could affect your claim and to explain how your legal rights may be affected by that lawsuit.

As a borrower defense applicant, you may have been previously informed of a class action lawsuit called Sweet v. DeVos, which challenged the Department’s delay in issuing final decisions on borrower defense applications, including yours. You may also have been informed in 2020 that the parties had proposed a settlement of the lawsuit, subject to the court’s approval. The court did not approve that proposed settlement, so the lawsuit continued. You can find more information about that here: https://predatorystudentlending.org/news/press-releases/in-new-ruling-judge-denies-borrower-defensesettlement-over-department-of-educations-perfunctory-alarmingly-curt-denials-press-release/. The lawsuit now also challenges the Department’s denial of certain borrower defense applications.

We now write to inform you that there is a new proposed settlement of the lawsuit. The settlement will not become final until it is approved by the court as fair, adequate, and reasonable. This Notice describes how your legal rights may be affected by this settlement.

What is the case about?

A lawsuit was filed in a federal court in California by seven borrower defense applicants who represent, with certain exceptions, all borrowers with pending borrower defense applications. The lawsuit challenges the way the Department has been dealing with borrower defense applications over the past few years, including the Department’s delays in issuing final decisions and the Department’s denial of certain applications starting in December 2019. The case is now called Sweet v. Cardona, No. 3:19-cv-3674 (N.D. Cal.).

Now, both parties are proposing to settle this lawsuit. This proposed settlement is a compromise of disputed claims, and Defendants continue to deny that they have acted unlawfully.

What are the terms of the proposed settlement for borrowers who applied for borrower defense relief on or before June 22, 2022?

In the proposed settlement, the Department agrees to resolve the borrower defense applications of people who have borrower defense applications pending as of June 22, 2022 on the following terms:

  • If your borrower defense application related to federal student loans borrowed to pay for attendance at a school on the list attached to this letter, you will receive a discharge of federal loans associated with that school and a refund of any amounts paid to the Department on those federal loans, and the credit tradeline for those loans will be deleted from your credit report. Within 90 days of the date that the court’s approval of the settlement agreement becomes final, the Department will notify you that you will receive this relief. You will receive the relief within one year of the final effective date of the settlement agreement. Until this relief is provided, the Department will not take action to collect your debt.
  • If your loans are not associated with a school on the list attached to this letter [My Exhibit C above.], you will receive a decision on your application according to the following schedule:
    • If you submitted your application between January 1, 2015 and December 31, 2017, the Department will issue a decision no later than 6 months after the court’s approval of the settlement agreement becomes final.
    • If you submitted your application between January 1, 2018 and December 31, 2018, the Department will issue a decision no later than 12 months after the court’s approval of the settlement agreement becomes final.
    • If you submitted your application between January 1, 2019 and December 31, 2019, the Department will issue a decision no later than 18 months after the court’s approval of the settlement agreement becomes final.
    • If you submitted your application between January 1, 2020 and December 31, 2020, the Department will issue a decision no later than 24 months after the court’s approval of the settlement agreement becomes final.
    • If you submitted your application between January 1, 2021 and June 22, 2022, the Department will issue a decision no later than 30 months after the court’s approval of the settlement agreement becomes final.
  • If you do not receive a decision within the timeline outlined above, you will receive a discharge of federal loans associated with your borrower defense applications and a refund of any amounts paid to the Department on those federal loans, and the credit tradeline for those loans will be deleted from your credit report.
  • The Department will decide your application in a streamlined review process that will determine whether the application states a claim that, if presumed to be true, would assert a valid basis for borrower defense; will not require further supporting evidence; will not require proof of reliance; and will not apply any statute of limitations to your application.
  • If your application is approved under the procedures above, you will receive a discharge of federal loans associated with your borrower defense application and a refund of any amounts paid to the Department on those federal loans, and the credit tradeline for those loans will be deleted from your credit report.
  • The Department will not deny your application without first providing instructions on what is required for a successful application and giving you the opportunity to resubmit your application.
    • If you choose to resubmit your application, you must do so within 6 months after receiving those instructions. The instructions will explain that if you do not resubmit within the 6-month period, your application will be considered denied.
    • If you choose to resubmit your application within the 6-month time period after receiving the instructions, the Department will issue you a final decision no later than 6 months after receiving your resubmitted application.
    • If you received a notice from the Department in December 2019 or later informing you that your borrower defense application was denied, that denial has been voided and the Department is reviewing your application pursuant to the terms described above.
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What are the terms of the proposed settlement for borrowers who applied for borrower defense relief after June 22, 2022 but before final approval of the settlement?

  • If you submitted your application after June 22, 2022, but before the court approves the settlement agreement, the Department will issue a decision on your application no later than 36 months after the court’s approval of the settlement agreement becomes final. If the Department does not issue a decision within that time period, you will receive a discharge of federal loans associated with your borrower defense application and a refund of any amounts paid to the Department on those federal loans, and the credit tradeline for those loans will be deleted from your credit report.

Does the Department have any reporting obligations?

  • The Department will provide your lawyers with information about its progress making borrower defense decisions every three months, including how many decisions the Department has made and how many borrowers have received a loan discharge.

What if my loan is in default?

  • If you are in default, the Department will not take action to collect your debt, such as by garnishing your wages (that is, taking part of your paycheck) or taking portions of your tax refund, while your application is pending or while you are waiting to receive any relief you are owed under the settlement.

What happens next?

The court will need to approve the proposed settlement before it becomes final. The court will hold a public hearing, called a fairness hearing, to decide if the proposed settlement is fair. The hearing will be held on _______, 2022, beginning at _________, at the following address: United States District Court Northern District of California 450 Golden Gate Avenue, Courtroom 12, 19th Floor San Francisco, California 94102

Information about the hearing, including the process for participation and virtual attendance (if any), will be posted at https://predatorystudentlending.org/cases/sweet-v-devos/.

What should I do in response to this Notice?

IF YOU AGREE with the proposed settlement, you do not have to do anything. You have the right to attend the fairness hearing, at the time and place above, but you are not required to do so.

IF YOU DISAGREE WITH OR HAVE COMMENTS on the proposed settlement, you can write to the court or ask to speak at the hearing. You must do this by writing to the Clerk of the Court, at the following mailing address: Clerk of the Court United States District Court Northern District of California 450 Golden Gate Avenue San Francisco, California 94102

You can also submit comments by email to the Clerk of Court at [email address]. Your written comments or request to speak at the fairness hearing must be postmarked or date-stamped by ____, 2022. The Clerk will provide copies of the written comments to the lawyers who brought the lawsuit.

Where can I get more information?

There is more information about the Sweet lawsuit on Class Counsel’s website at https://predatorystudentlending.org/cases/sweet-v-devos/. Check this site periodically for updated information about the lawsuit.

A copy of the proposed settlement is available online at https://predatorystudentlending.org/cases/sweetv-devos/documents/.

If you have questions about this lawsuit or about the proposed settlement, please visit this Frequently Asked Questions page, https://predatorystudentlending.org/sweet-v-devos-class-members/, which also has contact information for the lawyers who brought the lawsuit.

Sincerely,

U.S. Department of Education

Federal Student Aid

File a Borrower Defense Claim

If you have not previously submitted a Borrower Defense claim, you can do so here.

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