A federal appeals court has once again told the U.S. Department of Education it cannot delay debt relief owed to hundreds of thousands of borrowers who say they were defrauded by their colleges. On July 17, 2026, the Ninth Circuit Court of Appeals rejected the department's request to push back deadlines in Sweet v. McMahon, a long-running class action that has grown into one of the largest settlements of its kind against the federal government.
What the settlement covers
The Sweet v. McMahon case (formerly Sweet v. DeVos and Sweet v. Cardona) stems from a 2019 lawsuit accusing the Education Department of failing to process Borrower Defense claims — a federal program that lets students discharge loans if their school lied about job placement rates, accreditation, or program costs. The settlement covers borrowers who attended roughly 151 mostly for-profit schools on an approved list, including now-defunct chains like ITT Technical Institute, Corinthian Colleges, the Art Institutes, and Everglades College, along with the University of Phoenix and Lincoln Educational Services. The Project on Predatory Student Lending (PPSL), which represents the plaintiffs, puts the settlement's total value at more than $23 billion in loan discharges, refunds of payments already made, and corrected credit reporting.
What changed this summer
About 200,000 borrowers in the original settlement class received automatic relief starting in 2022. The more recent fight has centered on a second group — so-called 'post-class applicants' who filed Borrower Defense claims between June 23, 2022 and November 16, 2022, after the original class closed. The Trump administration and Education Secretary Linda McMahon argued the department lacked the resources to process these claims on the settlement's schedule and that post-class applicants shouldn't automatically qualify for the same relief as class members. A three-judge Ninth Circuit panel disagreed, ruling unanimously that the department had shown no 'significant change ... in factual conditions or in law' that would justify delay. PPSL says more than 170,000 additional borrowers have since received automatic relief worth roughly $11 billion, though the group says over 1,000 original class members are still waiting on discharges or refunds promised years ago, and more than 210,000 separate Borrower Defense applications remain in a backlog.
Once again, the courts have rejected the Department's attempts to evade its obligations.
Key dates
- January 28, 2026 — deadline for the department to decide post-class applications tied to the settlement's approved ('Exhibit C') list of schools.
- April 15, 2026 — deadline for decisions on post-class applications from schools not on that list.
- One year from a discharge notice — the window in which the department must actually process an approved discharge.
What borrowers should do
PPSL and legal aid groups say most eligible borrowers don't need to take action — relief under the settlement is automatic for class members, and processed decisions are sent directly to them. Borrowers who believe they may qualify, including those who attended one of the approved schools and filed a Borrower Defense claim, should check their account and any notices at StudentAid.gov. Relief only applies to loans tied to the specific school named in a claim, not to a borrower's entire loan balance if they attended more than one school.
Not legal or financial advice
This article summarizes public reporting and court filings; it isn't legal advice. Borrowers with questions about their specific loans should consult StudentAid.gov or a qualified student loan attorney.
