Sweet v. Cardona Settlement: What Borrowers Need To Know

Nearly 300,000 federal student loan borrowers are receiving forgiveness through the Sweet v. Cardona settlement, a class-action lawsuit that challenged the Department of Education's handling of borrower defense claims. The lawsuit accused the Department of Education of ignoring or unfairly denying applications from borrowers who said their schools misled them.

Under the settlement, many loans have already been discharged, and additional decisions and discharges will continue through July 2025.

If you're part of the Sweet v. Cardona settlement or have submitted a borrower defense claim that's still pending or was denied, here's what you need to know about the case and what comes next.

Overview of Sweet v. Cardona

Sweet v. Cardona (formerly Sweet v DeVos) is a class-action lawsuit brought by federal student loan borrowers in June 2019. The borrowers claimed they were misled or defrauded by certain schools and then denied the relief they were entitled to under borrower defense.

The lawsuit argued that the Department of Education acted in bad faith by ignoring claims or issuing blanket denials without properly reviewing evidence.

“Sweet v. Cardona was a notable lawsuit because it exposed the Department of Education for dragging its feet and unfairly denying student loan forgiveness requests,” says Leslie Tayne, Esq., managing director of Tayne Law Group, noting that the student requests included proof that the schools misled or took advantage of them.

“It also clarified that students have the right to loan forgiveness when they've been misled and that the government must treat those claims seriously, fairly, and transparently.”

The final settlement was approved on Nov. 16, 2022. The Department of Education has been issuing relief to eligible borrowers since then.

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Settlement relief and protections

Borrowers covered by the Sweet v. Cardona settlement are eligible for specific protections and benefits. Those who qualify will receive what the Education Department calls “full settlement relief.” That includes:

• Discharge of any remaining federal student loan balances.
• Full refunds of past payments made on those loans.
• Removal of related loan records from the borrower's credit report.

If you're a class member, you don't need to make loan payments while your borrower defense application is under review or your discharge is being processed. Your loans also won't be sent to collections during this time.

“The settlement's emphasis on schools with widespread misconduct may set a precedent for how future cases are handled,” says Tayne. “Additionally, the case could lead to stronger protections for borrowers, encouraging the government to take more proactive steps in holding institutions accountable and ensuring fair treatment for students seeking loan relief.”

Who qualifies for Sweet v. Cardona forgiveness?

You may be eligible for student loan forgiveness under the Sweet v. Cardona settlement if:

• Your borrower defense application was pending as of June 22, 2022, or
• Your borrower defense claim was denied between December 2019 and October 2020

If either applies, you're considered a class member in the Sweet v. Cardona lawsuit.

Class members are divided into two groups:

• Automatic relief group: This includes borrowers whose applications were tied to one of the listed schools in the settlement. If you're in this group, you don't need to take any further action. The Education Department will automatically cancel your debt and provide full settlement relief. You can check the full list of schools included in the settlement to see if you qualify for automatic forgiveness.
• Decision group: This includes borrowers with pending borrower defense claims for schools not listed in the settlement. Your eligibility for relief depends on the outcome of your borrower defense application.

Key updates for borrowers

If you're in the automatic relief group

If you qualified for automatic full settlement relief, your benefits should have already been processed. The Department of Education's deadline to provide full relief was Aug. 31, 2024.

Loan refunds are issued as one or more checks or direct deposits. These may come directly from the U.S. Department of the Treasury and might not mention the Sweet v. Cardona settlement by name, so keep an eye out for any unexpected payments.

If you're in the decision group

If you're in the decision group, meaning your borrower defense claim wasn't tied to a listed school, the Department of Education will review your application based on when you submitted it. You'll receive a decision by the dates outlined in the table below, depending on your application year:

You'll be notified by email, so check your inbox regularly, especially if you applied more recently.

If the Department of Education doesn't issue a decision by the deadline that applies to your case, you'll automatically receive full settlement relief.

What to do if you haven't heard anything

If you believe you should have been included in the Sweet v. Cardona settlement but haven't received any updates, consider contacting the Project on Predatory Student Lending (PPSL). This legal group brought the class action and continues to advocate for borrowers misled by predatory schools.

“This is definitely something you want to do sooner rather than later,” says Ben Michael, attorney at Michael & Associates.

“When borrowers think they are a part of a class action lawsuit that PPSL is taking on, reaching out to them and getting included in that helps ensure that they will get any potential reparations that get secured by PPSL in their efforts,” he adds.

“They don't provide individual legal advice, however, so if that is something you are looking for, you may want to contact an attorney instead, and they can help you more specifically,” Michael advises.