A federal appeals court decision in late July cleared the way for nearly 200,000 additional borrowers to have their student loans forgiven under a major class-action settlement with the U.S. Department of Education. This brings the cumulative total of borrowers receiving relief to approximately 450,000. The settlement addresses claims that borrowers were significantly misled by their schools and that federal officials delayed providing relief under the Borrower Defense program, which permits defrauded federal student loan borrowers to have their debts excused.
The litigation spanned multiple presidential administrations, with the case name evolving from Sweet v. DeVos to Sweet v. Cardona to Sweet v. McMahon. During the pendency of the lawsuit, some borrowers experienced substantial increases in their debt obligations. According to advocacy groups involved in the case, the defendant institutions made false promises regarding career prospects, earnings potential, and credit transferability. Many affected borrowers faced significant personal hardships, including difficulty obtaining mortgages and auto financing, delayed family planning, and reported mental health challenges.
Eligibility for the settlement is determined by the school attended and the timing of Borrower Defense application submissions. Borrowers with pending claims as of Nov. 2022 may be included in the settlement class, as well as certain borrowers whose applications were denied between Dec. 2019 and Oct. 2020. Eligible individuals can verify their application submission dates through Studentaid.gov. The settlement applies exclusively to federal student loans, as private loans do not qualify for Borrower Defense protections.
The average federal student loan balance forgiven under the settlement exceeded $48,000, though individual amounts vary. Many eligible borrowers may also qualify for refunds of previous payments made toward their loans, with typical refunds exceeding $15,000. The Education Department must complete debt forgiveness by June 15, 2027. Borrowers awaiting relief are not required to make payments during the settlement process.
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