Thousands of borrowers are expecting to receive formal notices in four weeks that their student loans are getting discharged. But if the Education Department gets its way, those borrowers may have to wait much longer, and in a worst-case scenario, they may not get a student loan discharge at all.
The uncertainty centers on the latest chapter of the Sweet v. McMahon saga, a legal battle that has been ongoing for nearly a decade at this point. In the class action lawsuit that was initially filed during the first Trump administration, hundreds of thousands of federal student loan borrowers argued that the Education Department had unlawfully delayed or denied applications for Borrower Defense to Repayment, a program that allows borrowers to request student loan forgiveness if their school defrauded them by making false promises about central aspects of their program, such as the ability to land a lucrative job or to transfer credits to another educational institution.
In 2022, the Education Department reached a settlement agreement that has resulted in the discharge of federal student loans for hundreds of thousands of borrowers. The last group of Sweet v. McMahon borrowers, “post-class applicants” who submitted their Borrower Defense application during a short window in 2022 before the settlement agreement received final approval from the court and who had not attended one of the dozens of institutions included on an exhibit to the settlement agreement, are entitled to discharge decision letters by June 15 if the department failed to adjudicate their Borrower Defense applications by a settlement deadline in April. But after several failed attempts to delay relief and extend the deadline, the Trump administration has appealed to the Ninth Circuit Court of Appeals. Here’s where things now stand.
Education Department Must Discharge Student Loans For Remaining Post-Class Applicants, Borrowers Argue
The Education Department has made multiple attempts to delay final settlement relief, including discharging federal student loans, for the final group of Sweet v. McMahon post-class applicants. But two federal district court judges rejected its request.
“At no point before November 2025 did the Department signal that it would have any trouble meeting its deadline to adjudicate all post-class applications,” said one the federal district court judges in its ruling in February, the second court decision denying the department’s request for deadline extension. “Rather, the Department waited until the eleventh hour, not even three months before the January 28, 2026 deadline, to seek the relief now requested.”
The department filed an emergency request for a stay (or pause) of the district court’s decision with the Ninth Circuit Court of Appeals shortly after the district court ruling in February. But the court denied that request, as well, in March. Now, the department is pressing its appeal, arguing that the lower court judges abused their discretion when they denied the department’s request to delay providing settlement relief by 18 months, including discharging student loans, for post-class applicants in Sweet v. McMahon. Attorneys for the post-class applicants strongly opposed the department’s request.
“Both the January 28 and April 15 deadlines have now passed,” argued the Project for Predatory Student Lending, the legal group representing student loan borrowers in Sweet, in its response brief filed in late April. “When they did, tens of thousands of class members obtained a vested right to relief under the Settlement. By its appeal, the Department now seeks to claw back those vested contractual rights, on the asserted basis that both district courts clearly abused their discretion by refusing to delay the deadline. This is an exacting standard, and the Department cannot meet it.”
“The Department has not demonstrated that there was any abuse of discretion in these decisions, let alone clear abuse,” continued the group. “The district courts’ findings were supported by the record, and it was not legal error for the courts to consider the interests of the very people whom the Department’s request for an extension would most affect.”
Education Department Doubles Down On Efforts To Stall Discharging Student Loans Under Sweet v. McMahon
Last week, the Education Department filed its reply brief, doubling down on its argument that the administration is entitled to a lengthy extension of time to review post-class members’ Borrower Defense to Repayment applications, and that any discharges of federal student loans should be paused in the interim.
“The stakes of this appeal are stark: absent modification of the post-class adjudication deadline, the Department of Education must provide $11 billion in refunds and discharges to hundreds of thousands of non-parties whose claims for relief have not been adjudicated on the merits,” argued the department in its reply brief. “It must do so even though it has been diligently implementing the settlement with limited resources for years. It must do so even though it has almost completely finished implementing the settlement with respect to the parties to the litigation, including by providing $12 billion in relief to nearly 300,000 borrowers.”
The department characterized the settlement relief required for post-class applicants, which would include student loan discharges and a refund of past payments made on the applicable student loans, as a “windfall” that would be unfair because these applicants did not even submit their Borrower Defense applications until the settlement agreement had been nearly finalized.
“The government’s and the public’s interests in modification of the settlement are also underscored by the sweeping relief provided by the settlement to post-class applicants,” continued the department. “As explained, the underlying claims pressed by those applicants were that the Department had unreasonably delayed acting on their applications. Not only were those claims plainly meritless for the post-class applicants, whose applications had not even been filed at the time the settlement was agreed to, but even successful such claims could not support an order requiring the Department to provide substantive relief (as opposed to an order simply requiring adjudication of the applications).”
When Student Loans Could Be Discharged For Remaining Sweet v. McMahon Post-Class Applicants
Attorneys representing student loan borrowers in Sweet maintain that, barring any future orders from a court to the contrary, the Education Department remains bound by the settlement deadlines outlined in the court-approved agreement.
“SWEET UPDATE: The Department of Education has filed a reply brief in support of its appeal of key post-class deadlines in Sweet v. McMahon,” said the Project on Predatory Student Lending in a statement on X last week. “As always, PPSL is ready to fight to ensure borrowers receive the relief they are owed under the settlement agreement. Existing deadlines and relief rights remain in effect.”
Under the terms of the Sweet v. McMahon settlement agreement, the remaining post-class applicants who did not receive a decision from the Education Department on their Borrower Defense to Repayment application by April 15 are supposed to receive a formal notice from the department by June 15 that they are entitled to full settlement relief. This would include a discharge of their federal student loans, and a refund of payments made on those loans. Student loan forgiveness is then expected to go through within one year of the notice.
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