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$6 billion borrower defense settlement to proceed immediately for 200,000 borrowers
immediately for 200,000 borrowers
Dear friends,
Late last night, Judge William Alsup denied the motion to stay the implementation of settlement relief in the borrower defense lawsuit Sweet v. Cardona. With this order, full settlement relief granted to class members may now proceed, while the Court stayed discharges of applicants who attended a school operated by one of the three intervening entities—American National University, Everglades College, Inc., and Lincoln Educational Services, Inc.—for 7 days to allow those entities to seek a stay from the Ninth Circuit Court of Appeals.
The approved settlement would automatically cancel more than $6 billion in federal student loans for over 200,000 class members and promise streamlined review of another 64,000 applications for relief. The settlement also provides timeframes for decisions on over 250,000 applications submitted since June 2022.
The settlement received final approval on November 16, 2022. Under court rules, there was then a window in which parties could appeal Judge Alsup’s ruling. That window was set to expire on January 17, 2023, at which point the settlement would become “effective” – meaning the Department of Education could start distributing settlement relief.
On January 13, 2023, three schools (Lincoln Educational Services Corporation, American National University, and Everglades College, Inc.) filed notices of appeal attempting to block the settlement. They also asked the District Court to stay the implementation of the settlement pending their appeals.
The appeals themselves will proceed on a separate track in the Ninth Circuit.
The borrowers are represented by the Project on Predatory Student Lending and Housing and Economic Rights Advocates (HERA).