What does that Department of Education email about the Sweet v. DeVos settlement mean?

Borrower Defense to Repayment (DTR)
#1

Hi everyone,

Since a ton of you have emailed me about this today I thought it would be easier to write a post here rather than try to reply to everyone individually.

First of all, I am not a lawyer. This is my laypersons understanding of what is going on.

If you want a much more detailed update about this case from actual lawyers, you can go here:

In a nutshell the Sweet v. DeVos was about forcing the Department of Education to actually start processing borrower defense claims, rather than just delaying delaying delaying indefinitely. This settlement achieved that goal. There is some good news and bad news. The good news is that because the Department of Education has now agreed to process the backlog of borrower defense applications, some people will finally get the justice they deserve and will get their debts discharged.

BUT there is some bad news too. Betsy DeVos is going to try to deny as many of these applications as she can get away with, even when people deserve full discharge under the law. So we will also see a wave of denials. It is possible that many of these denials will not stand up to future legal challenges. Those challenges will take a long time, but could not even get started until the Department of Education made some kind of initial decision. So even though it is bad news that people are getting denied, this settlement still advances the football down the field towards the goal of winning more discharges for more people in the future.

So what is this email all about? With any settlement like this everyone who is impacted has a chance to weigh in. This email is giving an explanation of what the settlement is and how to weigh in. You do not need to do anything in response to this email if you don’t want to.

I would keep in mind that this particular lawsuit, and this particular settlement, is not a silver bullet. It was never going to fix the problem. It had a very narrow goal, to stop the Department of Education’s indefinite delay. This settlement achieved that goal. You are right to be angry if you have gotten a denial, but objecting to this settlement doesn’t impact the denial at all. That is an ongoing fight.

Again I am not a lawyer but I hope that this helps you make sense of what this email means, and what it doesn’t mean.

-Thomas

Borrower Defense Application #:

Dear _________:

Your rights may be affected, please read carefully.

You filed an application asking the U.S. Department of Education to cancel some or all of your federal student loan debt because the school you (or your child) attended did something wrong. This is known as a borrower defense application.

As a borrower defense applicant, you may have been previously informed that you may be part of a class action lawsuit in a case called Sweet v. DeVos, which challenges the Department of Education’s delay in issuing final decisions on borrower defense applications, including yours.

We now write to inform you that there is a 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 as of April 7, 2020. The lawsuit challenges the fact that the Department of Education did not issue a final decision on any borrower defense applications from any school between June 2018 and December 2019. The case is Sweet v. DeVos, No. 19-cv-3674 (N.D. Cal.).

The lawsuit is ONLY about the fact that final decisions were not issued during that period of time, NOT whether those applications should result in loan cancellation or not. 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?

In the proposed settlement, the Department of Education agrees to resolve pending borrower defense applications of people who have borrower defense applications pending as of April 7, 2020 on the following terms:

The Department of Education will approve or deny all Sweet Class members’ pending borrower defense applications within 18 months of when the settlement agreement is approved by the Court. The Department will notify you of whether your claim was approved, whether you will receive any loan cancellation, and if so, how much loan cancellation you will receive.

If your application is approved and you are entitled to any loan discharge, the Department of Education will complete the process of cancelling some or all of your outstanding loan debt within 21 months of the date on which the settlement agreement is approved by the Court.

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

The Department of Education confirms, consistent with governing law and existing policies, that if you are in default, it 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.
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 Oct. 1, 2020 beginning at 8 a.m. Pacific Time at the following address:

United States District Court
Northern District of California
450 Golden Gate Avenue, Courtroom 12, 19th Floor
San Francisco, California 94102

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

Your written comments or request to speak at the fairness hearing must be postmarked by Aug. 20, 2020. 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 v. DeVos lawsuit on Class Counsel’s website at Sweet v. DeVos Class Members | Predatory Student Lending and on the Department of Education’s website at StudentAid.gov/Sweet. Check this site periodically for updated information about the lawsuit.

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

If you have questions about your borrower defense application or the status of your federal student loans, contact our borrower defense hotline at 1-855-279-6207. The hotline is available from 8 a.m. to 8 p.m. Eastern Time on Monday through Friday.

If you have questions about this lawsuit or about the proposed settlement, please visit this Frequently Asked Questions page, Sweet v. DeVos Class Members | Predatory Student Lending, which also has contact information for the lawyers who brought the lawsuit.

Sincerely,

U.S. Department of Education
Federal Student Aid

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DeVos reaches settlement lawsuit
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#2
#3

(I am also not a lawyer)

My biggest concern about it is in line with what is mentioned above. There will be an attempt to deny applications. Many of us have been irreparably harmed by the delay. I have been in forbearance for almost 3 years but yet my interest has continued to accrue. Unless that is addressed my payoff will be both longer and more expensive due to the delay. Additionally, I was on the income based repayment schedule so I have “lost” 3 years towards my forgiveness. That is three years that is impossible to get back.

I will be responding to the proposed settlement explaining that in more details. I would encourage everyone who is in the same boat to respond because if the suit settles it can’t be brought again.

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#4

Hi @polyglot717,

On the issue of interest, the Department of Educations official policy is that if you have been forced to wait for over a year to get a final decision on your borrower defense to repayment application, they will waive the interest for the time you have been waiting if your application gets denied. See the bottom of page 4 and the top of page 5 from these public comments James Manning, the acting undersecretary of the Department of Education, made in November 2017.

Manning Rulemaking Comments.pdf (91.5 KB)

But you are right to have this on your radar because even though this is what the Department has promised to do, we have seen them break their promises before, and it is always possible that the servicers will screw up the implementation.

While your account has been in administrative forbearance the interest has been accruing, but that interest has not been capitalized yet. Instead, at some point before your payments are set to resume, we should see the interest that has accrued since the Department received your borrower defense application zeroed out. Keep your eye on this closely. Log into your servicer periodically and take screenshots and save them. If your account moves into a different status (like repayment, or a different kind of forbearance/deferral, etc) and the interest is still there, or if you get notified by your servicer that they plan to capitalize the interest on your account, reach out to me ASAP. We can call your servicer together to find out what is going on. And if they aren’t doing this properly, we can force them to.

That said, given the likelihood that servicers or the Department might not make good on this promise, I personally think it is a legitimate issue to raise with the judge on this case. Perhaps the judge can add something to the settlement that requires the Department to submit reports to the court verifying that they have waived all interest for all accounts that were denied.

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#5

Hello Thomas @Thomas_Gokey,

I have just screenshotted my student loan dashboard to see if my interest accrued will be removed in the near future.

How can we get the lawyers to put more “favorable rules” for students into this lawsuit? Some of us have filed BDRs back in 2016 so the filing date in this proposed settlement should begin in 2016 and not April 2020. That way students who filed for BDRs can automatically have 80% of the student loan forgiven today because it is past 21 months already.

This is unfair! This settlement doesn’t help at all.

Thank you for helping us find ways to work thru our broken, unfair, and illegal Department of Education.

#6

Thanks!

#7

Hi @PR90057,

This lawsuit was never intended to be a silver bullet that wins discharge for everyone who deserves it. Instead it was simply aimed at forcing the Department to make a decision, any decision at all, so that we can advance the fight to the next stage. On that level alone it is a success and the settlement allows us to advance the fight. This is not over by any means, but they are going to force us to fight for every penny discharged.

Basically, it was not possible to sue the Department of Education over improperly denying people’s applications because the Department wasn’t denying them, they were just delaying forever. But now that they have started improperly denying people’s applications we can sue them over that and, hopefully, the courts can force the Department to start discharging more of them. That is how this settlement helps.

But I totally share your frustration and anger over this process and the injustice in it. I’m channeling that frustration and anger into debtor organizing because unless we build real power, this kind of shit is going to keep happening to us.

#8

Thomas,

I’ve been calling both phone numbers and emailing the contacts I have from submitting my affidavit, but I’ve gotten no responses (the Harvard phone number is wrong, btw). I’d like to find out from someone involved with these cases, in plain English, why I was only allotted to receive a 10% dismissal. Since the lawyers aren’t responding, can you help?

#9

Hi @SteveS801,

Wow that is crazy the Department only dismissed 10%. To me that is very unfair especially since these for-profit colleges never cared about our college education.

I’m hoping some God-like litigation can come out of this entire mess and force the Department to do the right thing.

Good luck to all of us!

#10

Hi @SteveS801,

Standard caveats apply: I am not a lawyer, I cannot give you legal advice. This is my own sense for what is going on. I might be wrong and often am.

The 10% partial discharge has nothing to do with this particular lawsuit (Sweet v. DeVos). Instead this was determined by the Department of Education itself and it is, completely, utterly bullshit.

But there is good news! The good news is that the very fact that they granted you a partial discharge means that the Department is basically admitting that your school violated the law resulting in your debt. They can’t go back on that now.

My understanding of the borrower defense law/regulations is that once they determine that, you have a right to a 100% discharge. But under DeVos the Department of Education is trying to claim that yes yes the school broke the law, yes yes the debt is fraudulent. But we are still going to enforce a % of that debt anyway. They don’t have very good reasons for this, and the methodology they have devised to determine the % is bogus. They are going to have a hard time defending all of this in court.

The good news is that there is a new lawsuit (Pratt v DeVos) that is specifically aimed at these questions about partial discharge. It is just getting going, and the pandemic has forced everything to slow down, so it will take a long time (probably a year or two) before we know the result. But the gears are in the works on this. For updates you can check here:

I’m not sure what phone numbers you are calling or where you got those phone numbers so I’m not sure I can help with that. Harvard cannot take phone calls to speak with each individual about these different cases.

#11

The phone numbers I am referring to are those listed on the affidavit itself, as contact I go for the attorneys. There are two groups: a housing advocate in the Bay Area, CA and the Harvard Legal Center. Neither returns calls.

#12

Hello @Thomas_Gokey,

Oh awesome and this case was just recently filed last week June 9, 2020. Go Harvard Law!

So graduates of Corinthian colleges are successful after the colleges closed down? And ED is using this data, comparing successful graduates with non-succesful graduates, to determine the %? This makes no sense. The college closed ED! Do the right thing and forgive 100% of all student loans.

And if all the Corinthian college money disappeared in bankruptcy court shouldn’t all our student loans disappear too in that bankruptcy? I don’t understand why I need to pay my student loan if my school closed down. I don’t qualify for a closed school discharge due to my program dates and graduation date being outside of the time period that ED certified.

I got 3 BDR application denials and I don’t qualify to apply for the other discharge applications.

Good luck to us all! Come on Harvard Law!

#13

Harvard is doing what they can, and I am glad they are doing what they are doing. It is one important tactic to keep pressing on the legal front.

But I cannot stress this enough. There is nobody who is going to save us. We have to organize and fight for ourselves. Borrower Defense to Repayment is just one, very minor, tool that we have used to the fullest extent we possibly can. But I want to keep our eyes on the real prize, getting rid of all $1.7 trillion of student debt for EVERYONE, not just for Corinthian students.

We are closer now than we have ever been to winning mass debt cancellation, and if we are going to win it is going to mean putting our effort in to organizing other debtors and taking political action together.

I feel like I am beating a dead horse but we have only gotten this far because of organizing and we are only going to win because of organizing, and nobody is going to do this for us. We all need to do it together. It is the only real power we have and the only path to real victory.

Has your member of congress cosponsored the college for all legislation? If not, how are we going to force them to or vote them out?

Do you have other debtors who live near you? Reach out. Meet together (following proper social distancing, using zoom/etc), learn what each others situations and struggles are. Provide mutual aid together. And plan actions together to fight debt collectors and predatory practices of all kinds.

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