A federal appeals court has denied the latest request to delay relief for nearly 450,000 student loan borrowers, clearing the way for the U.S. Department of Education to discharge approximately $23 billion in federal student loans. The borrowers allege their colleges misled them about job prospects, salary outcomes, or credit transferability, entitling them to relief under the Borrower Defense to Repayment program.
The decision follows a class-action settlement spanning three presidential administrations, originally filed as Sweet v. DeVos in 2019 and later renamed Sweet v. Cardona and Sweet v. McMahon. The lawsuit, led by the Project on Predatory Student Lending (PPSL), argued that the Education Department under the Trump administration delayed processing claims and denied relief without merit review. A federal appeals court ruling in late July rejected the Trump administration’s latest attempt to postpone discharges, allowing nearly 200,000 additional borrowers to receive relief.
The Education Department confirmed the discharges but declined to comment on the legal proceedings. In court filings from April, the Trump administration cited concerns about an "unexpectedly large" number of applicants and potential "substantial windfall at taxpayer expense" as reasons for delays. The borrowers’ debts had, in some cases, ballooned during the prolonged review process—one borrower’s loan grew from $250,000 to $400,000 while awaiting a decision.
How the relief will be distributed
The settlement covers borrowers who attended institutions deemed to have engaged in predatory practices, including for-profit colleges. Relief includes full loan discharges and refunds for payments made on loans tied to the misconduct. Once finalized, the settlement will represent the largest class-action relief against the U.S. government in history, according to PPSL.
Legal and political context
The Borrower Defense program, established under the Obama administration, allows borrowers to seek forgiveness if their school violated state laws or misrepresented key information. The Trump administration halted processing of pending claims in 2018, leading to the lawsuit. The Biden administration later resumed reviews but faced ongoing litigation over delays and denials.
The case underscores broader debates over student loan forgiveness, with advocates arguing the relief addresses systemic failures in higher education oversight. Critics, including some within the Trump administration, have raised concerns about the fiscal impact of mass discharges, though the settlement’s terms were ultimately upheld by the courts.
Next steps
The Education Department has begun processing discharges, with the full scope of relief expected to be completed in the coming months. Borrowers do not need to take additional action to receive forgiveness under the settlement.