A federal appeals court has ruled that the U.S. Department of Education must continue providing student loan forgiveness to hundreds of thousands of borrowers covered by the Sweet v. McMahon settlement.

In a unanimous decision, the U.S. Court of Appeals for the Ninth Circuit rejected the Department's latest attempt to delay relief for borrowers who qualify under the landmark settlement. The ruling means the Department must continue carrying out its obligations under an agreement expected to provide more than $23 billion in student loan relief to over 500,000 federal student loan borrowers.

The decision is one of the largest legal victories for student loan borrowers this year and could significantly affect borrowers still waiting for debt cancellation.

What Happened?

The case centers on Sweet v. McMahon, a class-action lawsuit involving borrowers who said they were misled by colleges and universities and waited years for decisions on their Borrower Defense to Repayment applications.

Borrower Defense is a federal program that allows certain borrowers to have their federal student loans canceled if their school used false or misleading information to persuade them to enroll.

After years of litigation, the Department of Education agreed to a settlement in 2022 that provides eligible borrowers with:

• Full federal student loan forgiveness

• Refunds of certain previous loan payments

• Updates to affected credit reports

The current dispute involved a group known as post-class applicants—borrowers who applied for Borrower Defense after the settlement was signed but before it received final court approval.

The Department argued it needed additional time because of the large number of applications it had to review. It also claimed these borrowers should not automatically receive the same relief as earlier applicants.

The Ninth Circuit disagreed.

According to the court, the Department failed to show that circumstances had changed enough to justify modifying a settlement it had voluntarily entered into years earlier. The judges also noted that the Department already knew how many post-class applicants existed before the settlement became final.

What Does This Mean for Borrowers?

For eligible borrowers, the ruling removes another legal obstacle that could have delayed student loan forgiveness.

Borrowers covered by the settlement remain eligible to receive relief if the Department failed to issue decisions on their Borrower Defense applications within the deadlines established by the court.

The Project on Predatory Student Lending, which represents borrowers in the case, says qualifying borrowers should continue receiving notices from the Department of Education and should receive full settlement relief—including loan discharge, refunds, and credit reporting corrections—within one year of receiving their official notification.

Why It Matters

Student loan debt remains one of the largest financial obligations for millions of Americans.

For borrowers who qualify under the settlement, eliminating that debt could improve monthly cash flow, lower debt-to-income ratios, strengthen credit profiles, and create new opportunities to save, invest, or purchase a home.

While this ruling does not apply to every federal student loan borrower, it represents another significant milestone in one of the largest student loan settlements in U.S. history.

What's Next?

The Department of Education could still ask the full Ninth Circuit or the U.S. Supreme Court to review the decision.

However, the Department has now lost multiple attempts to delay the settlement, and the court has made clear that the agreed-upon deadlines remain in effect. Unless another court intervenes, the Department must continue processing relief for eligible borrowers.

Borrowers who believe they may qualify should monitor their StudentAid.gov account, watch for communications from the Department of Education, and ensure their contact information is current.

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