Around 170,000 Americans who have spent years waiting for decisions on their student loans are now entitled to have the affected debt canceled.
A federal appeals court rejected the Education Department’s attempt to delay relief promised under the Sweet v. McMahon settlement. The case involves former students who said their colleges misled them about costs, accreditation, job prospects or the value of their programs.
The July 17 decision does not introduce a new student loan forgiveness program. It forces the federal government to honor deadlines it accepted under an existing court settlement. Borrowers whose applications were not decided before those deadlines qualify for full relief.
For people included in the latest group, full relief can mean cancellation of the relevant federal loans, a refund of payments already made to the Education Department and removal of the loans from their credit reports.
The Department Missed the Deadlines It Agreed To
View this post on Instagram
The lawsuit began after borrowers accused the Education Department of leaving thousands of Borrower Defense to Repayment applications unresolved. Borrower defense allows people to request a federal loan discharge when a college misled them or broke certain laws connected to their enrollment or education loans.
A settlement was reached in 2022. It created a timetable for reviewing old applications and set consequences if the department failed to finish the work on time.
The latest dispute concerned “post-class applicants.” That term covers people who submitted borrower defense claims between June 23 and November 15, 2022.
The department was originally required to decide those applications by January 28, 2026. A court later allowed a limited extension until April 15 for claims involving schools outside the settlement’s Exhibit C list. Exhibit C contains 151 schools that had already faced findings or allegations of serious misconduct.
Thousands of applications were still unresolved after the deadlines passed. Under the settlement, an application that did not receive a timely decision became eligible for full settlement relief.
The Education Department tried to obtain more time. The Ninth Circuit Court of Appeals refused. Judges found that the government had not shown the kind of unexpected change needed to rewrite the agreement.
The court also noted that the department knew as early as February 2023 that the post-class group contained more than 205,000 applicants. Staffing and workload problems did not excuse the missed deadlines because the size of the group had been known for years.
According to the Project on Predatory Student Lending, which represents the borrowers, more than 170,000 post-class applicants are protected by the latest decision.
What Borrowers Are Entitled to Receive?
Full settlement relief covers the federal debt linked to the school named in an approved borrower defense claim. It does not automatically erase every student loan a person has.
Eligible borrowers are entitled to three main forms of relief:
- Cancellation of the relevant federal student loan balance
- A refund of payments made to the Education Department on that debt
- Deletion of the associated loan entry from the borrower’s credit report
A borrower who attended several colleges may still owe loans connected to schools that were not included in the claim. Private student loans are not covered because the settlement concerns federal debt administered by the Education Department.
The Federal Student Aid explanation of the settlement identifies two deadlines for post-class applicants. People who attended an Exhibit C school qualified for full relief if they did not receive a decision by January 28. Applicants from other schools qualified if the department did not decide their claims by April 15.
| Borrower group | Required decision deadline | Result if no decision arrived |
|---|---|---|
| Post-class applicant from an Exhibit C school | January 28, 2026 | Full settlement relief |
| Post-class applicant from another school | April 15, 2026 | Full settlement relief |
| Applicant who filed after November 15, 2022 | Not covered by the settlement deadline | Claim proceeds under regular borrower defense rules |
The Settlement Covers More Than 500,000 People in Total
The new ruling directly concerns more than 170,000 post-class applicants. The larger Sweet v. McMahon settlement has secured at least $23 billion in relief for more than 500,000 borrowers.
Some people in that larger group have already had their balances removed. Others have received approval notices but are still waiting for loan servicers to finish discharges, issue refunds or correct credit records.
That distinction matters because the latest decision is not a sudden order canceling loans for 500,000 new borrowers. It protects the final large group whose applications were not handled before the government’s deadlines.
The case is also separate from proposals for broad student debt cancellation. The Trump administration has not announced a plan to erase federal loans for all borrowers or for everyone below a certain income.
Our report on student loan relief under the Trump administration explains how current cancellation remains tied to existing programs, legal obligations and individual eligibility.
Borrowers Should Check Their Accounts and Old Emails
Anyone who filed a borrower defense application on or before November 15, 2022, should check the inbox connected to the application and sign in to the official Federal Student Aid website.
Eligible post-class applicants should have received a notice confirming full settlement relief. Borrowers from Exhibit C schools were expected to receive notices around March 30. Notices for the remaining group were due by June 15.
Receiving a notice does not always cause the balance to disappear immediately. The department and loan servicers still need time to remove the debt, calculate refunds and send corrections to the major credit bureaus. The settlement allows up to one year after the eligibility notice for delivery of the relief.
Borrowers who believe they qualify but cannot find a notice should contact Federal Student Aid or the organization representing the settlement class. They should also confirm that their email address, mailing address and loan servicer information are current.
No company can move a borrower to the front of the line. Applications, account checks and settlement relief are free. A person asking for payment to unlock the discharge is not offering a legitimate government service.
Borrowers Who Filed Later Are Not Included
People who submitted claims after November 15, 2022, are outside the settlement. They may still apply for a federal borrower defense discharge, but their cases will be reviewed under the regular rules.
Such applicants usually need to explain what the school said or did, how the information influenced their decision to enroll and what financial harm followed. Documents such as advertisements, enrollment agreements, emails and program descriptions can support a claim.
Relief under Sweet v. McMahon is substantial, but it affects only part of the national student debt problem. Outstanding federal and private education debt exceeded $1.8 trillion by late 2025, according to the latest student loan debt figures.
For the borrowers covered by the court decision, however, the result is personal and immediate. They filed claims years ago, watched deadline after deadline pass and then faced another attempt to postpone the outcome. The court has now said the government must provide the relief promised in the settlement.
