SAN FRANCISCO — A U.S. appeals court has rejected the Education Department's attempt to delay student loan relief under a long-running settlement involving borrowers who said they were defrauded by their schools, clearing the way for additional discharges affecting tens of thousands of borrowers.
The ruling by the 9th U.S. Circuit Court of Appeals concerns the settlement in Sweet v. McMahon, formerly Sweet v. Cardona, which requires the federal government to provide relief to eligible borrowers who filed claims under the Borrower Defense to Repayment program.
The settlement, reached in 2022, covers borrowers who alleged that their colleges misled or defrauded them. Under the agreement, eligible borrowers can receive cancellation of qualifying federal student loan debt, along with other relief depending on their circumstances.
The appeals court's decision rejected the Education Department's effort to postpone relief for a group of borrowers whose claims remained unresolved after deadlines established under the settlement. The decision means the department must proceed with the relief required under the agreement, according to court records and legal representatives for the borrowers.
The case is separate from broader efforts to cancel federal student debt and does not provide blanket forgiveness to all U.S. student loan borrowers. Relief is limited to borrowers who meet the settlement's eligibility requirements and whose claims fall within its scope.
The ruling comes as the Trump administration has faced a series of legal challenges over federal student loan programs. In June, two federal judges blocked Education Department rules that sought to restrict eligibility for the Public Service Loan Forgiveness program by allowing the government to disqualify certain employers deemed to have a "substantial illegal purpose." The department said it was reviewing its options after those rulings.
The Education Department has also been implementing changes to federal repayment programs following litigation over the Biden-era Saving on a Valuable Education plan. The SAVE plan was ended by a March 2026 court order, according to the federal loan servicer MOHELA, with affected borrowers directed to consider other repayment options.
The latest ruling does not itself establish a new nationwide student loan forgiveness program. Instead, it requires the government to carry out relief already provided for under the Sweet settlement, with eligible borrowers awaiting the processing and discharge of their loans.
