200,000 Borrowers Await Ninth Circuit Ruling on $12 Billion Student Loan Settlement

A federal appeals court heard arguments on Friday over whether the Education Department can further delay a court-approved settlement that promises loan discharges, payment refunds, and credit report corrections to more than 200,000 student loan borrowers who say they were defrauded by their colleges.

The case, Sweet v. McMahon, has been working through the courts since 2019 (as a result, the case has changed names a few times: Sweet v. DeVos and Sweet v. Cardona). The settlement, valued at up to $12 billion, set firm deadlines for the Department to process borrower defense to repayment applications. The Department has missed those deadlines and asked for extensions multiple times. So far, those requests have been denied.

During Friday’s hearing before the Ninth Circuit Court of Appeals, Judge Kim McLane Wardlaw offered a blunt assessment: “The time for negotiating is over. You missed your deadline.”

The court is now considering the Department’s motion to stay the settlement while it appeals.