A $23 billion class-action settlement with the Department of Education could erase student debt for 450,000 borrowers, giving long-delayed relief to people who said they were sold an education on false promises. A federal appeals court denied a Trump administration request at the end of July to postpone a decision on borrower applications, keeping the settlement on track for now.
The settlement is drawing attention because the number attached to it is unusually large and because the court ruling may widen its reach. In addition to the 450,000 borrowers covered by the agreement, the appeals court decision could allow another 200,000 borrowers to have their loans forgiven, depending on how borrower applications are handled next.
The plaintiffs said their schools misled them by promising higher earnings, transferable credits and stable careers that never materialized. The advocacy group that brought the lawsuit forward in 2019 said dozens of schools were implicated for significant institutional misconduct, and many of those schools are now closed. That broader case has moved through three presidential terms, which helps explain why a deal that should have delivered relief long ago is still producing new fights.
The plaintiffs also said the Trump administration delayed delivering the settlement they were entitled to, even after the legal process had advanced to the point where borrower applications were due for a decision. The appeals court’s refusal to postpone that decision effectively rejected the latest attempt to slow the process, leaving the Department of Education to move ahead on a settlement that could still change as applications are reviewed.
What happens next is the borrower-applications decision itself and the question of how many of the remaining borrowers will actually get relief. The clearest reading of the ruling is that the settlement is no longer just a promise to the 450,000 already counted; it is now a live path to debt forgiveness for many more, with the final total still unknown.
