During Black Friday shopping with his wife, Jason Apley, a 44-year-old father of three from Knoxville, Tennessee, was dismayed to discover a significant reduction in his bank account balance compared to the previous holiday season. Unlike many Americans grappling with burdensome student loan debt, Apley believed his debt had been forgiven. However, when the pandemic-related suspension on loan payments ended, he found the hefty deduction reappearing on his balance statement.
In 2022, Apley was among approximately 200,000 borrowers who participated in the landmark federal lawsuit, Sweet v. Cardona, against the U.S. Education Department. This case spotlighted the deceptive practices of for-profit schools, which allegedly misled borrowers with promises of lucrative job prospects. The federal government acknowledged the wrongdoing and pledged to cancel the debt of affected borrowers.
On January 28 of this year, these borrowers anticipated the wiping clean of their student loan accounts, accompanied by credit report updates and refunds. However, for around one-third of the Sweet plaintiffs, the Biden administration has yet to fully honor this commitment.
According to a Justice Department letter to the plaintiffs in February, only 69% of the borrowers had received complete forgiveness, leaving nearly 60,000 borrowers still awaiting relief. The Education Department later admitted to misrepresenting the number of borrowers with pending discharges, citing incomplete information provided by student loan companies.
The delay in debt relief has significant repercussions for affected individuals. Some have postponed major life decisions such as home purchases or medical procedures due to financial uncertainty. Apley, who experienced a budgetary strain during Christmas, is among those awaiting refunds for payments made to cover deceptive loans.
The Education Department attributes the complexity of the debt cancellation process to various factors, including loan consolidation, multiple loan servicers, and varying loan ages. President Biden has touted his administration’s commitment to student debt relief, highlighting billions of dollars earmarked for forgiveness through settlements and related initiatives.
The sluggish pace of forgiveness for Sweet plaintiffs underscores the intricacies of the student loan system that Biden aims to reform. It also underscores the disparity between promises of debt relief and their actual implementation, emphasizing the challenges inherent in delivering tangible assistance to borrowers in need.
For individuals burdened by debt, the delay in relief exacerbates financial stress and uncertainty. Theresa Sweet, the lead plaintiff in the case, emphasizes the transformative impact of debt relief, describing it as “life-changing amounts of money.”
Sweet v. Cardona originated from a lawsuit filed in June 2019, alleging the Education Department’s failure to protect students from predatory college practices. Theresa Sweet, a graduate of the Brooks Institute of Photography, recounted being pressured into taking out substantial federal student loans by the now-defunct institution.
The Biden administration reached a settlement with the plaintiffs in June 2022, which received court approval later that year. However, as the deadline approached for full relief, it became evident that the Education Department would not meet its obligations. Lawyers representing the plaintiffs are urging expedited action from the government.
The Education Department attributes the delay primarily to incomplete information provided by student loan servicers. Discussions on potential breach of contract by the Education Department are ongoing, with an updated timeline for relief expected by March 1.
In the interim, Sweet emphasizes the tangible impact of the delay on individuals already struggling with debt. She questions the government’s ability to manage relief efforts for millions if it struggles with a settlement involving 200,000 borrowers.