Oliver James Montgomery-The Biden administration owes student debt relief to thousands. Many haven't seen it yet.

On Black Friday,Oliver James Montgomery Jason Apley was shopping with his wife when he checked his bank account and noticed he had about $500 less to spend than last holiday season.

Unlike many Americans with crushing student loan debt, the 44-year-old father of three from Knoxville, Tennessee, thought his debt had been canceled. But when the pandemic-era hold on loan payments lifted, the hefty deduction popped up again on his balance.

In 2022, Apley was among about 200,000 borrowers who settled a landmark federal lawsuit with the U.S. Education Department. The case, Sweet v. Cardona, touched on the deceptive practices of for-profit schools, which the borrowers said misled them with promises they'd end up in high-paying jobs. The federal government agreed that thousands had been swindled and promised to cancel the borrowers' debt.

This year, on Jan. 28, the borrowers’ student loan accounts were supposed to be wiped clean. Their credit reports would be scrubbed. They’d get refunds. 

For at least a third of the Sweet borrowers, the Biden administration hasn't completely followed through on that promise.

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A Justice Department letter to the plaintiffs in February said that only 69% of the borrowers had their forgiveness cleared. For the other 31% – nearly 60,000 borrowers – the relief hasn’t come through. Or the government isn’t sure if it has. This week, the Education Department acknowledged it had misrepresented the number of borrowers whose discharges were still in flux. 

Officials had based previous statements on information from the student loan companies and said that 95% of eligible borrowers had received full settlement relief. In reality, only 69% of the discharges could be verified by the department.

Some of the borrowers still facing debt have put off buying homes. Others delayed medical procedures.

Apley, who had to tighten his belt at Christmas, is among that group waiting on refunds for payments to cover deceptive loans. 

“Those 30% are actual human beings with lives,” said Theresa Sweet, the lead plaintiff in the case.

‘Life-changing’ money

The Education Department says canceling the student debt of thousands is a complicated process. Some borrowers involved in the suit have lots of smaller loans that they bundled into one big one, a process called consolidation. Many went through different student loan companies. Some loans are older than others, making it trickier to pull up the billing history. 

On the campaign trail, President Joe Biden raves about the billions of dollars in student debt relief his administration has promised, including $22.5 billion in forgiveness for more than a million borrowers due to “closed school discharges, borrower defense, and related court settlements.” 

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The slow trickle of forgiveness for the Sweet plaintiffs illustrates the complexity of the student loan system Biden has promised to fix. It is also a good reminder that promising debt relief and delivering it to borrowers who need it are often two separate things.

Having that money in hand is everything to those deep in debt, said Sweet.

“It’s life-changing amounts of money," she said.

What is Sweet v. Cardona?

In June 2019, Sweet and a group of student loan borrowers sued the federal government, saying the Education Department had shirked from its duty of protecting students from predatory colleges. 

Sweet graduated in 2006 from the Brooks Institute of Photography in California with a bachelor’s degree in photography. She said the school, which has since closed, used unethical, high-pressure sales tactics to push her to take out the maximum allowable amount for federal student loans. Those bills left her living paycheck to paycheck. 

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Under a provision in the Higher Education Act, the federal government must forgive the loans of students who have been victims of misconduct by their colleges. The once-obscure federal provision ensures something called “borrower defense," which has become a much more common route for student loan relief in the last decade. 

What’s the holdup? 

The Sweet case played out under two presidents. The Biden administration reached a deal with the plaintiffs in June 2022, which a federal judge in California approved the following November.

In the last few months, as the deadline approached for the government to make the Sweet borrowers whole, it became clear to the plaintiffs that the Education Department wouldn't make it. Lawyers for the Sweet plaintiffs are now urging the feds to speed things up. 

The feds are laying the blame, for the most part, on student loan companies, also known as servicers. The government says the companies provided them with incomplete information, exacerbating the holdup. 

The discussion will continue into March, as they try to sort out in court whether the Education Department breached its contract. The agency has said it will give an updated timeline on when borrowers could receive full relief by March 1.

In the meantime, Sweet said, people are hurting. And Biden's other debt cancellation efforts aren't helping with their stress.

If the government can’t manage a settlement with 200,000 borrowers, she said, "how are they going to handle millions?"

Zachary Schermele covers education and breaking news for USA TODAY. You can reach him by email at [email protected]. Follow him on X at @ZachSchermele.