Sweet v. McMahon Settlement: Eligibility, Delivery, and Court Rulings

The Sweet v. McMahon settlement is a 2022 federal class action agreement that requires the U.S. Department of Education to cancel federal student loans, refund past payments, and delete credit report entries for borrowers who filed borrower defense to repayment claims against 151 mostly for-profit colleges. Originally filed as Sweet v. DeVos in 2019 in the Northern District of California, the settlement has delivered roughly $12 billion in relief to nearly 300,000 borrowers as of mid-2026, with additional automatic discharges now flowing to later applicants after the Department missed court-ordered deadlines.¹

What the Settlement Provides

Eligible borrowers receive what the agreement calls “Full Settlement Relief,” which has three parts:²

Cancellation of federal student loans tied to the school named in the borrower defense application.
Refunds of amounts the borrower paid the federal government on those loans, including money taken through tax refund offsets and wage garnishments.
Deletion of the credit tradeline for the discharged loans from the borrower’s credit report.

One limitation matters for borrowers with commercially held Federal Family Education Loan Program loans. Payments made to private bank lenders are not refundable, because the Department has no authority to refund them. Borrowers who consolidated those FFEL loans into a Direct Consolidation Loan can, however, get refunds of payments made on the consolidation loan.³

Applications are reviewed under the 2016 Borrower Defense Regulation using a streamlined process that does not require outside evidence, proof of reliance, or application of any statute of limitations.²

Who Qualifies

The settlement covers two overlapping populations. Class members are borrowers who had a borrower defense application pending with the Department on June 22, 2022. That group also includes people who received the form-letter denials the Department issued between December 2019 and October 2020, because those denials were rescinded. Post-class applicants are borrowers who filed applications between June 22, 2022, and November 16, 2022.³²

The class totaled roughly 264,000 people. Another 250,000-plus applications came in during the post-class window.⁴⁵

The Exhibit C School List

What separates automatic relief from individual review is the school a borrower attended. Attached to the settlement is “Exhibit C,” a list of 151 institutions the Department identified as having strong indicators of substantial misconduct — credible allegations of fraud or confirmed findings of wrongdoing.⁶ Familiar names appear on it: the University of Phoenix, DeVry University, ITT Technical Institute, the Art Institutes, Corinthian Colleges, Walden University, and Kaplan, among many others.⁷

Class members who attended an Exhibit C school were placed in the Automatic Relief Group and are entitled to full relief without individual review. Class members who attended schools not on the list fell into the Decision Group, entitled to individual decisions on staggered deadlines based on when their application was filed.³

How Relief Is Being Delivered

The settlement took effect on January 28, 2023, after Judge William Alsup granted final approval on November 16, 2022.²⁸¹

The post-class group is where the fight has been. The Department was required to decide all post-class applications by January 28, 2026. When that deadline arrived, most decisions had not been made, and the settlement’s remedy for missed deadlines kicked in: automatic full relief.

Post-class applicants who attended Exhibit C schools — about 80% of the post-class group, roughly 170,000 borrowers — received eligibility notices in late March and April 2026, with relief due within one year of those notices. Post-class applicants at non-Exhibit C schools were subject to an extended deadline of April 15, 2026, which also passed without decisions. In June 2026, the Department began sending discharge notices to approximately 30,000 borrowers in this final cohort.¹

The Department’s Push Back and Where the Courts Landed

The Department has repeatedly told the court it cannot meet the deadlines. In March 2024, plaintiffs alleged the Department had failed to deliver relief to over 50,000 class members by the first January 28, 2024, deadline, prompting supervisory status conferences and mandatory meetings between the Department, loan servicers, and plaintiffs’ counsel.⁸⁹

In November 2025, the Department asked for an 18-month extension of the post-class deadline, until July 2027, citing resource constraints, declining staff at Federal Student Aid, and an adjudication rate of about 1,500 applications per month. It warned that missing the deadline would trigger billions in automatic discharges.⁵ On December 11, 2025, Judge Alsup denied most of the request. He kept the January 28, 2026, deadline in place for post-class Exhibit C applicants and gave only a limited extension to April 15, 2026, for the rest.¹⁰ Alsup called the 18-month delay “unacceptable” and said of the borrowers: “They have great interest in this because the student loan has been hanging over their head for how many years, how many decades, wrecking their credit.”¹¹

The Department appealed and sought an emergency stay from the Ninth Circuit. On March 25, 2026, a three-judge panel denied the stay, finding the Department had not shown a likelihood of success on the merits.¹²⁹¹³

The Department has argued in court filings that providing automatic relief to the remaining post-class applicants will cost an additional $11.8 billion in forgiven balances and $640 million in refunds.⁵

If You’re Waiting on Relief

Borrowers whose applications remain in the pipeline stay in forbearance or stopped-collection status. That means no payments are required, and no garnishments or tax offsets should be occurring while an application is pending.³

Even after sending eligibility notices, the Department has told borrowers that the timeframe for finalizing relief remains “the subject of ongoing litigation.”¹ Keep the contact information on your Federal Student Aid profile current, and watch for official emails from noreply@studentaid.gov. The Project on Predatory Student Lending, which represents the class, cautions that no one should ever charge you for help with a borrower defense claim.³

1
Forbes. Student Loan Discharge Emails Sent to 30,000 Borrowers
2
Federal Student Aid. Sweet v. McMahon Settlement
3
Project on Predatory Student Lending. Sweet v. McMahon Class Members
4
Project on Predatory Student Lending. Student Borrowers Win Final Approval of Settlement
5
Thompson Coburn LLP. ED Motion for Emergency Stay, Ninth Circuit
6
Tate Esq. Sweet v. McMahon Settlement Update
7
Federal Student Aid. Sweet v. Cardona School List
8
Supreme Court of the United States. Sweet v. McMahon, Opposition Brief of Plaintiffs
9
Project on Predatory Student Lending. Sweet v. McMahon
10
Higher Ed Dive. Education Department Delay Declined, Sweet Settlement
11
Project on Predatory Student Lending. Judge Denies ED’s Request for 18-Month Delay
12
Ninth Circuit Court of Appeals. Sweet v. McMahon, No. 26-1136
13
Court Listener. Sweet, et al. v. McMahon, et al.