The Ninth Circuit ordered the Education Department to keep discharging education department student loans for more than 500,000 Americans under the Sweet v. McMahon settlement. On Friday, the court rejected the department’s bid to delay relief and said the settlement should move ahead.
Sweet v. McMahon Settlement
The ruling keeps alive a settlement that calls for $23 billion in discharges, refunds of past payments and other relief. The agreement was first reached in 2022 in Sweet v. Cardona, before it became Sweet v. McMahon.
It arose from a class action filed in 2017 by thousands of federal student loan borrowers who challenged how Borrower Defense to Repayment applications were handled. Under that program, borrowers can seek discharge if they show their school used fraud or other misconduct to induce enrollment.
Education Department Delay Bid
The Education Department asked for more time, saying resource constraints justified a delay. It also argued that the borrowers should not qualify for the relief. The Ninth Circuit found no significant change in circumstances to modify the settlement and ordered Linda McMahon, as secretary of education, to continue the discharges.
Eileen Connor, president and executive director of the Project on Predatory Student Lending, said on Friday: “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” and “Today's decision brings us another step closer to fulfilling the settlement's promise to every borrower, and we won’t stop fighting until that promise is realized.”
Borrower Relief Under Sweet
The settlement required the Education Department to automatically discharge the federal student loans of hundreds of thousands of borrowers who submitted Borrower Defense to Repayment applications before the agreement was finalized and attended institutions on Exhibit C. Those borrowers are also due refunds of past payments made on the covered loans and adjustments to credit reporting tied to the settlement.
For borrowers in that group, the court’s order means the department has to keep moving on relief rather than pause it while the challenge plays out. The ruling did not set a completion date, leaving the department to carry out the settlement terms already in place.
