Dive Brief:

• Two House committees will investigate whether the U.S. Department of Education was “improperly influenced by political considerations” when it settled the Sweet v. Cardona class-action case, which cleared the way for $6 billion in student loan cancellations for 200,000-plus borrowers.
• Those borrowers alleged their colleges defrauded them, asking that their loans be forgiven under a regulation known as borrower defense to repayment. However, the department’s decision to support the settlement raised concerns for Republican Reps. James Comer and Virginia Foxx, respectively chairs of the Committee on Oversight and Accountability and the Committee on Education and the Workforce. 
• The two lawmakers wrote to Education Secretary Miguel Cardona on Wednesday, demanding the department turn over documents and communications regarding the case.

Dive Insight:

Borrowers sued the Education Department in 2019, alleging Trump administration officials mishandled their borrower defense claims. A settlement proposal fell apart under the Trump administration, but the Biden administration struck a new deal with borrowers in June 2022. 

The deal provides automatic relief for those who had filed a borrower defense complaint against one of about 150 colleges. They have started having their loans discharged. The settlement also set up guidelines for hundreds of thousands of other borrowers who are seeking loan cancellation under borrower defense.

This rankled Comer and Foxx, who described the settlement as a backdoor to “bypass lawful processes to fulfill student loan bailout promises made by the President.” 

The Biden administration seems to be seeking “legally dubious alternative avenues” to forgive loans, because it appears likely the U.S. Supreme Court will rule against a plan to discharge broad amounts of loan debt for borrowers earning up to $125,000 annually, the lawmakers wrote.

They also raised concerns about an attorney working at the Education Department, Toby Merrill, who previously founded a legal center that represented the Sweet v. Cardona plaintiffs. However, an Education Department spokesperson said in a text message Wednesday that “consistent with the Biden administration’s ethics pledge, Ms. Merrill is recused from the matter and has played no role in the Department of Education’s work on the Sweet litigation.”

Foxx and Comer gave the department two weeks to provide the requested documents.