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Education Department removes four colleges from Sweet v. Cardona settlement list

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  • The U.S. Department of Education removed four colleges from its list of institutions whose students will receive automatic debt relief under a proposed $6 billion settlement, according to court documents.
  • Last month, US District Judge William Alsup granted preliminary approval of the settlement in the trial Sweet v. Cardona, filed in 2019 by students who say the federal government did not properly handle their debt relief claims after they were defrauded by their colleges. Upon final approval, approximately 200,000 borrowers will have their student loans forgiven.
  • In the settlement, the Education Department included a list of 150-plus colleges whose students would receive relief automatically. Alsup allowed the department to remove four on Aug. 16 that the agency said it included by mistake. The department also had to add one more it said should have been on the list from the start.

Dive Insight:

The Sweet v. Cardona The lawsuit was filed by students who say the Education Department mishandled their claims under the borrower’s defense against repayment regulation, which provides debt relief to borrowers defrauded by their colleges. They said the Department of Education delayed decisions on their claims, causing them to receive student loans.

As part of the proposed settlement, the Education Department named colleges whose students would receive automatic relief, arguing that those institutions are marked by “strong evidence” of misconduct or have high rates of borrower defense applications. Several of the listed colleges contested these arguments in court filings.

In it update to list, the Department of Education removed four colleges that were mistakenly included “based on a clerical error,” court documents said. They are ATI College, Missouri College of Cosmetology North, Hallmark University and International Technical Institute.

Joe Fisher, president of Hallmark University, said in an email that the institution recently learned of its inclusion on the list and began investigating how it happened. Shortly thereafter, university officials discovered that the error had already been fixed.

“We are disappointed by the error but pleased that it was identified and corrected,” Fisher said. Hallmark is a nonprofit organization in San Antonio that enrolled 923 students last year.

ATI College and Missouri College of Cosmetology North, both for-profit, did not respond to requests for comment.

The Department of Education’s settlement proposal listed Lincoln Educational Services as the corporate parent of International Technical Institute. But a spokesperson for the company said in an email that it does not own the institution and has never had any affiliation with it.

The International Technical Institute closed in the early 1990s, according to the Department of Education’s database of closed institutions.

Two other Lincoln-owned institutions are listed as covered by the Sweet v. Cardona settlement.

The Education Department also said it is adding one institution, Missouri College. The agency explained that it was the school it “intended to include when it inadvertently listed Missouri College of Cosmetology North instead.”

Alsup’s ruling ordered the parties to notify class members of the changes by updating their websites with the new version of the list.

Higher Ed Dive has also updated a list of institutions named in the settlement published as part of our news coverage.

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