House Republicans Open Investigation Into Biden Administration’s Borrower Defense Settlement
By Hugh T. Ferguson, NASFAA Senior Staff Reporter
A pair of House Republican leaders are accusing the Biden administration of seeking to “hijack” federal courts in order to advance a borrower defense settlement, and have launched an investigation into the Department of Education’s (ED) processes for carrying out the relief.
Reps. Virginia Foxx (R-N.C.), chairwoman of the House Committee on Education and the Workforce, and James Comer (R-Ky.) spearheaded a letter to Education Secretary Miguel Cardona, which requested documents from ED concerning borrower defense litigation that seeks to discharge $6 billion in student loans for over 200,000 borrowers.
The legal settlement, dubbed Sweet v. Cardona, has gone through a litany of legal challenges and was originally filed in 2019 (as Sweet v. DeVos) by seven named plaintiffs on behalf of themselves and federal student loan borrowers bringing borrower defense claims against ED.
At the end of 2022 the department announced a settlement in the Sweet v. Cardona case, stipulating that ED would discharge more than $6 billion owed by approximately 200,000 borrowers who collectively attended 151 institutions and said they were defrauded by their schools.
In their letter to ED, Foxx and Comer claim the department has overstepped its authority and argue that the Higher Education Act (HEA) does not offer any authority for ED to oversee borrower defense to repayment group or class action-type claims.
Foxx and Comer also claim that the case is an alternative effort by the Biden administration to carry out its student loan debt cancellation program.
“Given the Supreme Court is likely to declare unlawful the Biden administration’s student debt transfer scheme to discharge up to $20,000 of loans for most borrowers, the Department appears to be seeking legally dubious alternative avenues to make good on President Biden’s campaign promise to cancel federal student debt,” Foxx and Comer write.“Further, we are concerned about the potential coordination between the Department and plaintiffs in Sweet v. Cardona to engineer a mutually desired outcome at the expense of taxpayers and institutions of higher education.”
The lawmakers asked Cardona and the department to, within two weeks, provide a number of documents and information, including communications with federal agencies or third parties regarding the department’s decision to agree to the Sweet v. Cardona settlement agreement, internal legal and policy positions concerning the case, handling of borrower defense claims, ethics pledges, ethics pledge waivers, and ethics agreements pertaining to ED officials who performed work related to the case.
Publication Date: 5/25/2023
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