A lawsuit that survives two presidential transitions, undergoes three name changes, and ultimately results in the largest class-action settlement against the U.S. federal government in American history is almost quietly remarkable. The Sweet v. McMahon settlement is just that. Not a topic for political discourse. About 450,000 people who were told a college degree would change everything and discovered, too late, that they had been misled are now affected financially by a legal decision that took years to reach.
In 2019, the Project on Predatory Student Lending filed Sweet v. DeVos, a lawsuit against the Department of Education for failing to process a backlog of Borrower Defense applications. Students who have been defrauded by their schools can apply for the cancelation of their federal loans under the Borrower Defense, a federal protection. The department was able to take action. It just wasn’t working.
The schools involved in the settlement weren’t obscure establishments. Numerous organizations, many of which were for-profit and some of which had already closed, were identified as having made specific, verifiable promises that they never intended to fulfill. credit that was not transferable. They were unable to produce professional results. degrees that employers were unaware of. Over the years she waited for a decision that never materialized, one person reported seeing her loan balance increase from $250,000 to about $400,000. It’s difficult to accept that information, according to Eileen Connor of the Project on Predatory Student Lending.
The settlement agreement, which was reached in June 2022 and approved by a federal court in November of that same year, established a precise deadline for the Department of Education to process applications. A slow-motion battle over whether or not those deadlines would be met ensued. Citing a “unexpectedly large” number of applications, the department filed a motion requesting an 18-month extension three months prior to a crucial January 2026 deadline. The district court did not find this impressive.
Less so was the Ninth Circuit. The government’s urgent request for a stay was rejected by the appeals court, which pointed out bluntly that the department had been aware of the over 205,000 Post-Class Applicants in line since early 2023. The circumstances were not unexpected in any significant way.
In the end, the settlement offers the following specific benefits: complete cancelation of eligible federal student loans, reimbursement for previous loan payments, elimination of negative credit scores, and reinstatement of previously lost federal aid eligibility. The average amount of loans paid off was more than $48,000. Refunds for eligible individuals typically exceeded $15,000. These numbers aren’t abstract. They stand in for mortgages that people were unable to obtain. delayed medical care. families who stood by. Borrowers who had no practical way to pay back credentials that had fallen short of expectations described years of anxiety and depression related to debt.
It’s important to be clear about the implications of this case. Only federal student loans are covered by the settlement; private loans are not. The borrower’s school and the date of submission of their Borrower Defense application determine their eligibility. New applicants are not currently able to access it. Borrowers are not obligated to make payments while they wait for the Education Department to finish all eligible discharges by June 2027.
It’s unclear if the department will meet that final deadline without encountering any more obstacles. It seems reasonable to exercise caution given the case’s history, which includes the government submitting motions to postpone enforcement at almost every turn. However, the legal framework is now established. The court has clearly stated its stance. And that is more important than any policy debate for those who have been waiting, sometimes for more than ten years.
