Even in the waning days of the Biden administration, they are circumventing Congress and the rule of law to illegally forgive billions of dollars in student loan debt through the collusive class action settlement of Sweet v. Cardona. As one of his first acts on January 20, President-elect Trump should shut down this travesty.
The controversy stems from a class action lawsuit against the federal Department of Education initiated by borrowers in 2019. The Trump administration negotiated a legal settlement, but it was rejected by the U.S. District Court for the Northern District of California in 2020. Once the Biden administration took office, the parties negotiated a fresh settlement in what became Sweet v. Cardona. The 2022 settlement included something that had never been on the table: erasing $6 billion in student loan debt for roughly 200,000 borrowers.
The settlement has no statutory or regulatory basis. In reaching the settlement, Biden’s Education Secretary, Miguel Cardona, disregarded his duty to faithfully follow his statutory and regulatory responsibilities and, in doing so, he infringed on Congress’ power of the purse. Furthermore, by approving a settlement that, by design, undermines the Constitution’s separation of powers protections, the district court also abused its discretion.