A federal appeals court has rejected a request by the U. S.
Department of Education to delay processing pending borrower defense applications.
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This secures roughly $23 billion in student loan cancellation for approximately 450,000 individuals as of July 31, 2026.
The ruling by the U. S.
Court of Appeals for the 9th Circuit clears the way for nearly 200,000 additional applicants to receive full debt relief under the landmark Sweet v.
McMahon class-action lawsuit.
The decision marks the end of a seven-year legal battle spanning three presidential administrations.
It involved allegations that predatory institutions, mostly for-profit colleges, defrauded students regarding job placement rates, credit transferability, and potential earnings.
Background of the Lawsuit
Advocates originally filed the lawsuit in 2019, alleging the federal government unlawfully delayed and wrongfully rejected claims submitted through the Borrower Defense program.
Under a 2022 settlement framework, borrowers who attended designated institutions became eligible for automatic cancellation, while post-class applicants were promised timely reviews.
Because federal officials missed court-ordered processing deadlines, automatic relief was triggered for the remaining applicants.
Legal representatives for the plaintiffs emphasized that the government failed to honor its legal requirements while borrowers faced severe financial and personal consequences during years of administrative gridlock.
"At the end of the day, this settlement has impacted over 450,000 people, and it's improved their personal balance sheets by over $23 billion," said Eileen Connor, executive director of the Project on Predatory Student Lending.
