Important Information Regarding Borrower Defense Settlement for Devry Graduates

To our clients and readers who attended Ross Med, Ross Vet, or AUC med schools… this article is for you!

We expect you’ve heard about the proposed $6 Billion settlement in the Sweet vs Cardona case, which lists these three programs among many others. We’re reaching out not to lay out the entire case and settlement: you can find those details HERE and HERE. Instead, we want to summarize who is impacted, where it stands, and what your expectations should be.

First off, this is not blanket loan forgiveness for all Ross/AUC graduates. This settlement is for those who had legitimate complaints against their school, which impacted them financially, and filed Borrower Defense claims with the Department of Education and did not receive a response, or received a denial in 2019 or 2020. Because the Trump/Devos administration seemingly sat on these claims and did nothing to provide relief, the new administration is providing blanket and streamlined loan forgiveness to all claimants as opposed to going through each case one by one. If you are gainfully employed as a doctor or veterinarian and did not file a formal claim, you are likely not impacted by this settlement. If you did file a claim, or think you have grounds to, keep reading…

Next, this is not finalized. There is an initial agreement between the DOE and the claimants. It must be approved by a judge and that review is slated for July 28^th. Plenty of things could change before or after that date, including some schools advocating to have their name removed from the list. So until the settlement is finalized, nothing is certain. Assuming the terms hold as they are today, here is how this would play out:

There are three key groups (Statuses) with three action plans and outcomes. You’ll want to quickly identify which you fall into.

Status 1: Class – Those who submitted borrower defense claims before June 22^nd. You will receive a full loan discharge within one year of final settlement and refunds for all payments. There is nothing else you need to do. There are two subgroups within this group which you can read about in the links above.

Status 2: Post-Class – Those who apply between June 22nd and July 28^th (or whatever the final settlement date is). Your claims will be reviewed individually and you will receive a decision based on the merit of your application within 36 months of the final approval date of the settlement.

Status 3: Non-class members – If you apply for borrower defense after the final approval date of the settlement then you will not be a Class Member or a Post-Class Applicant. You would be subject to whatever borrower defense regulations are in place at the time.  Click here to learn more about Borrower Defense Claims and determine if your beef is worth submitting.

Anyone who submits a borrower defense claim at any time will receive an automatic forbearance on their loan payments until their claim is reviewed. Interest will accrue during the forbearance and that time will not count towards PSLF (should your claim be denied). Also take note that if you are approved for 100% discharge under borrower defense the school may have the right to deny providing your transcript or verifying your credentials. So read those borrower defense terms carefully!

If the proposed settlement is not ultimately approved by the court, there may be changes to who is included in the class. While we aim to stay as informed as possible on this case, please understand that DWOQ advisors are not litigation experts, and it is a liability for us to advise whether or not each borrower should pursue this. As such, DWOQ will not be assisting clients with the completion of borrower defense claim forms for this case.  The links above give you all of the resources you need to make your judgement, instructions for what you need to do, and legal experts you can speak with at no cost.

August 19^th, 2022 Update

On August 4th Judge William Alsup granted preliminary approval of the proposed joint settlement in the lawsuit Sweet v. Cardona. Upon final court approval, the settlement will immediately cancel at least $6 billion in federal student loans for approximately 200,000 individuals. Class members will have an opportunity to comment on the agreement prior to final approval. The court will hold a public hearing on November 3rd at the San Francisco court house. The general definitions for class members have not changed, and it is still our opinion that the scope of this settlement will only benefit those who filed claims before June 22nd, 2022, or those who have a significant grievance (i.e. cannot find gainful employment in their degree field). Still, we are hearing reports that Devry graduates are filing claims in large numbers in the hopes of being included in the case. We advise that you read the case for yourself, consider your situation, and decide whether you would like to participate or not.

November 17^th, 2022 Update

Judge Alsup granted final approval on November 16^th, calling the situation an “impossible quagmire”. It does not appear that any changes were made to the settlement terms we detailed above. But the schools continue to push back… Several schools have complained about the lack of procedure and investigations of the now 443k individual claims. One school stated that “in most instances, all the Department has before it are unproven and yet-to-be-adjudicated allegations, but the agency is nonetheless deeming schools guilty without further process or explanation.” Judge Alsup dismissed these allegations, however, stating that the settlement does not constitute a successful or approved borrower-defense claim. Thereby implying the settlement does not harm the schools. The 153 schools on the settlement list were not content with this answer. Many of them have banned together under joint legal representation, and have implied they will take the case to the 9^th Circuit Court of Appeals. In other words, this isn’t over.

January 13^th, 2023 Update

Three of the schools in the case filed an appeal to the 9th Circuit Court of Appeals today with a motion to halt the settlement.

“The department has undermined the rule of law, violated its own regulations, exceeded its statutory authority, and denied due process to institutions like ours, implying we had done something wrong,” Lincoln Educational Services wrote in a statement Tuesday. It said each former student’s claim should be assessed individually – and would probably be denied.

A conference call is scheduled for January 26^th to discuss the motion, and likely schedule hearings for the court of appeals. (The settlement was supposed to go into effect on January 28^th!) The hearings will likely take place in February. As we mentioned months ago, this could take a while to come to a final conclusion.

Also of note, the defendants stated the DOE/Biden administration lacks the authority to even grant widespread debt cancellation. This is interesting as it is one of the primary arguments being used in the Supreme court case to overturn Biden’s $10k to $20k debt cancellation plans. Could a Supreme Court ruling against Biden on that case also impact this case? I guess we’ll find out!

March 3^rd, 2023 Update

Judge Alsup rejected the most recent challenge to the Sweet vs. Cardona settlement, clearing the way for most borrowers involved in the case to begin receiving discharges. We say most because three colleges: American National University, Everglades College, Inc., and Lincoln Educational Services, Inc., have filed with the court of appeals, and their case is still pending. Borrowers from those three schools will have to endure this saga a bit longer. But it seems the path is now clear for all others in the class to have their loans discharged very soon. In addition to the original resource links above, Dept of ED now has a helpful page on this topic as well.

April 18^th, 2023 Update

This is it folks! The Borrower Defense Settlement appears to have cleared its’ final hurdle. Last week the Supreme Court declined to hear the appeal brought forth by the three colleges mentioned above. From our perspective (and basically everyone else covering this story) there appears to be no further recourse for those schools, and the cancellations should begin for all who are included in the Class. We’re going to cease our coverage here, and recommend you monitor the previously mentioned websites, or studentaid.gov, as they release further details.  

Til debt do us part,

Brandon Barfield

Brandon Barfield is the President and Co-Founder of Student Loan Professor, and is nationally known as student loan expert for graduate health professions. Since 2011, Brandon has given hundreds of loan repayment presentations for schools, hospitals, and medical conferences across the country. With his diverse background in financial aid, financial planning and student loan advisory, Brandon has a broad understanding of the intricacies surrounding student loans, loan repayment strategies, and how they should be considered when graduates make other financial decisions.