The Ninth Circuit on Friday rejected the Education Department's bid to delay student loan discharges for over 500,000 Americans and ordered the Education Department and Linda McMahon to keep carrying out the Sweet v. McMahon settlement.
The ruling keeps alive a long-promised round of Education Department student loans relief that was supposed to flow from a 2022 agreement tied to a class action filed in 2017. That settlement, first known as Sweet v. Cardona, calls for $23 billion in discharges, refunds of past payments and other relief for borrowers whose Borrower Defense to Repayment applications were said to have been wrongly rejected or delayed.
The borrowers in the case say the Borrower Defense program should have protected them after schools engaged in fraud or other misconduct. Under the settlement, the Education Department agreed to automatically discharge federal student loans for hundreds of thousands of borrowers who filed Borrower Defense to Repayment applications before the deal was finalized and attended one of several dozen institutions on an approved Exhibit C list. Those class members are also due refunds of past payments made on the covered loans.
The department argued that resource constraints and borrower ineligibility justified putting the discharges on hold, but the Ninth Circuit found no significant change in circumstances to modify the settlement. The court's rejection of that position marked another loss for the Trump administration in its months-long effort to slow the relief.
Eileen Connor, who has long represented the borrowers' side of the case, said the courts had again rejected the department's attempts to evade obligations to borrowers who have waited too long for the relief they are owed. She said the latest decision brings the case another step closer to fulfilling the settlement's promise to every borrower.
What happens next is straightforward: the Education Department must proceed with the discharges. The court did not set out a new deadline, and the unresolved question is which specific borrowers within the more than 500,000 covered will see the relief land first.
