Jul 23, 2026
Follow us on Google for more Moneywise news
Add us on GoogleThe Education Department must proceed with discharging student loan forgiveness for a group of eligible borrowers in a settlement case after a recent ruling from a federal appeals court.
The Friday decision marked a win for about 179,000 borrowers in the drawn-out Sweet v. McMahon settlement. In the ruling, the U.S. Court of Appeals for the Ninth Circuit rejected an appeal from the Department of Education to alter the initial settlement timeline since they hadn’t expected a large amount of applications for loan relief. The borrowers applied in a five-month window stretching from June to Nov. 2022.
Advertisement
“Once again, the courts have rejected the Department’s attempts to evade its obligations to borrowers who have waited far too long for the relief they are owed,” Eileen Connor, the Executive Director of the Project on Predatory Student Lending, said in a statement. The advocacy group is the plaintiff representing borrowers in the years-long case.
Thanks for subscribing!
The money news that actually matters.
By signing up, you accept Moneywise Terms of Use, Subscription Agreement, and Privacy Policy.
What the latest Sweet v. McMahon settlement decision said
The federal court laid out a sequence of events stating that the Education Department knew that 179,000 post-class applicants were in line for relief when it asked the federal court to green-light the settlement in Sept. 2022. The court said that the agency didn’t object to the terms until about three years later.
The three-judge panel wrote that the Education Department had failed to demonstrate that enough circumstances had changed to warrant modifying the settlement and it “understood the implications” of agreeing to the terms in the first place.
The 2022 decision — originally under the Biden administration — amounted to one of the largest settlements in U.S. history that eventually grew to $23 billion. It was awarded to borrowers who said they had been defrauded or misled by their colleges regarding the price tag, accreditation of their institution, or job prospects after graduation. Most of them had attended for-profit colleges or vocational programs.
The class-action lawsuit was first filed in 2019 on borrowers’ behalf against the Education Department. It accused the agency of botching applications from borrowers desiring loan forgiveness based on their colleges’ misconduct.
Three years later, a federal court set in motion for the borrowers to receive loan relief. Borrowers were classified into three pools, starting with the first group of 200,000 people who qualified for automatic relief if they attended one of the 150 colleges named in the class-action settlement. Relief in this case included loan refunds, balances wiped out and the erasure of negative credit reports.
Advertisement
Another group were borrowers who had pending relief applications by June 15, 2022. They were also entitled to decisions under a series of deadlines or else they qualify for automatic relief.
Must Read
- The ultra-rich use these 5 real estate strategies to build wealth while they sleep — you can start with just $100
- Here’s the average income of Americans by age in 2026. Are you keeping up or falling behind?
- Insurance companies profit most from drivers who auto-renew without shopping around. Comparing 100+ quotes takes 2 minutes and costs nothing
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
What’s next in the long-running settlement
The group affected by last week’s ruling were “post-class applicants,” or those who filed for relief between June 23 and Nov. 15, 2022. The Education Department originally had a deadline to issue decisions for this batch of applications by Jan. 28, 2026. They are newly entitled to a timely decision on their loan relief.
The Trump administration has proceeded with overhauling federal student loan relief programs this year. New repayment options were introduced on July 1.
However, a pair of federal judges blocked the administration from tightening eligibility to the Public Service Loan Forgiveness program which offers debt forgiveness to borrowers who end up working in government or nonprofit organizations.
You May Also Like
- JP Morgan sees gold hitting $6,000/oz before 2027 — and a Gold IRA lets you hold the physical metal while deferring the tax bill. Get your free guide from Priority Gold
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how
- Millionaires under 43 are reshaping investing — just 25% of their portfolios are in stocks. Here’s where their money is going
Joseph Zeballos-Roig is a policy and politics journalist based in Washington D.C with a focus on economics. He is experienced in connecting the significance of events in the capital to the lives of everyday Americans whether its taxes, tariffs, interest rates or federal programs.
