Court Ruling Clears Way for $23 Billion Student Loan Erasures for 450,000 Borrowers
A Ninth Circuit decision ends a multi-year lawsuit, allowing the Education Department to discharge the federal loans of more than 450,000 borrowers who claim they were misled by their schools.
The legal fight over the Sweet settlement, filed in 2019, has finally reached a conclusion after a Ninth Circuit ruling that forces the Education Department to honor its commitments to borrowers defrauded by colleges. The case, which has been titled after each education secretary—from DeVos to Cardona and now McMahon—centers on the borrower-defense rule that permits debt cancellation when schools provide false information.
The 2022 settlement covered students from more than 150 primarily for-profit institutions and allowed an extra round of applications, yet the department processed only about 60,000 of the roughly 250,000 new claims. After the court rejected the department’s request for an 18-month extension, the path is clear for the remaining discharges, which advocates estimate will bring total relief to over $23 billion for 450,000 borrowers.
Eileen Connor of the Project on Predatory Student Lending called the outcome comparable to historic tobacco settlements. One affected borrower, Jessica Feindt of Flint, Michigan, recently saw her University of Phoenix loans erased after years of hardship.
Why it matters
It clears massive debt for hundreds of thousands of borrowers and sets a precedent for holding schools accountable.
In this story