A federal appeals court has cleared the way for $11 billion in student loan forgiveness, bringing long-awaited debt relief to more than 170,000 borrowers who say they were defrauded by for-profit colleges. The U.S. Court of Appeals for the Ninth Circuit rejected the Education Department’s request on July 17, 2026 to delay the settlement’s relief schedule by 18 months, according to reporting from USA TODAY.
The ruling stems from the landmark Sweet v. McMahon settlement, a class-action case filed in 2019 by nine original plaintiffs, including Theresa Sweet, who attended Brooks Institute of Photography. Borrowers in the case alleged that the Education Department had failed to process their borrower defense applications—claims that schools had misled or defrauded them about job placement, career outcomes, or accreditation.
The Biden administration reached a settlement in 2022, but the Trump administration continued to delay relief, prompting the court challenge. The Education Department’s latest attempt to postpone the settlement was rejected by the Ninth Circuit, clearing the path for automatic debt cancellation. Eileen Connor, president and executive director of the Project on Predatory Student Lending, told USA TODAY that the ruling “made clear that the federal government cannot simply disregard borrowers’ rights and its own legal obligations without consequence.”
The $11 billion tranche covers borrowers who filed applications between June 2022 and November 2022 but did not receive timely decisions. The broader settlement involves approximately $23 billion in total relief for about 500,000 borrowers across multiple groups. According to Connor, the average federal student loan balance forgiven under the settlement was more than $48,000, though individual amounts vary significantly.
The case represents the largest class-action settlement in American history and the largest settlement ever reached against the federal government, Connor said in USA TODAY’s reporting. The Education Department has already discharged or refunded $12 billion for nearly 300,000 borrowers under the settlement as of April 2026. The agency’s final deadline to clear all borrowers’ loan debts is June 15, 2027.
Borrowers eligible for relief under this tranche need not make payments while waiting for forgiveness to take effect. Those who received approval of their borrower defense applications will also receive corrected credit reports and, where applicable, refunds of payments they had already made. Details about the settlement and the relief process are available on the Project on Predatory Student Lending website, which has been coordinating the case on behalf of plaintiffs.
The ruling comes as nearly half a million borrowers become eligible for debt cancellation under the broader $23 billion settlement. For many borrowers, the delay in processing their claims has had real consequences: one student told the court that her loan total had risen from about $250,000 to more than $400,000 while waiting for her borrower defense application—accepted in June 2022—to be resolved. Members of the original class of plaintiffs have been waiting for relief for as much as a year and a half.
Sources
- USA TODAY — reported the court ruling, the $11 billion forgiveness amount, 170,000 borrowers affected, the rejection of the Education Department’s 18-month delay request, and quotes from Eileen Connor about the settlement’s significance
- The Hill — confirmed the Ninth Circuit appeals court decision and the $11 billion debt relief
- Project on Predatory Student Lending — provided information on the Sweet v. McMahon settlement structure, the broader $23 billion relief amount, 500,000 total borrowers, and the case’s historical significance
- Higher Ed Dive — reported that as of April 2026, the Education Department had discharged or refunded $12 billion for nearly 300,000 borrowers
