Court Clears the Way for More Than 170,000 Student Loan Borrowers to Receive Debt Relief

More than 170,000 federal student loan borrowers are set to receive long-awaited debt relief after a federal appeals court cleared the way for another round of loan forgiveness under a landmark $23 billion settlement.

The decision is the latest development in Sweet v. McMahon (formerly Sweet v. Cardona), a class-action lawsuit filed by borrowers who said they were misled or defrauded by the colleges they attended. Many of those borrowers had been waiting for years for the U.S. Department of Education to process their Borrower Defense to Repayment claims.

On July 17, the U.S. Court of Appeals for the Ninth Circuit denied the Department of Education’s request to delay the relief, allowing automatic loan discharges to move forward for eligible borrowers. The court’s ruling means thousands of people who have been caught in legal delays can finally begin receiving the debt cancellation they were promised.

The borrowers affected by this latest ruling are part of a larger settlement that is expected to provide relief to more than 500,000 people who attended schools accused of deceptive or misleading practices. The settlement was reached after borrowers argued that the government failed to process their applications within a reasonable amount of time.

In addition to having their federal student loans canceled, many eligible borrowers may also receive refunds for payments they previously made on those loans. Any negative credit reporting tied to the discharged loans is also expected to be removed.

Consumer advocates called the ruling another major victory for students who were left with debt after attending schools that allegedly misrepresented job placement rates, graduation outcomes, or the value of their programs.

While the ruling clears the way for another wave of automatic forgiveness, not every borrower qualifies. The relief only applies to borrowers covered by the Sweet v. McMahon settlement or those whose Borrower Defense claims meet the settlement’s eligibility requirements.

For thousands of borrowers who have spent years waiting for answers, the court’s decision brings long-awaited relief and marks another step toward resolving one of the largest student loan cases in U.S. history.