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Judge Orders $23B in Student-Loan Cancellation for 170,000 Borrowers
A federal judge rejected Education Department delays, ordering automatic debt cancellation for 170,000 borrowers under the Sweet vs. McMahon settlement. The $23 billion class-action deal covers over 500,000 students defrauded by their schools.
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A federal court has cleared the way for automatic student-debt cancellation for roughly 170,000 borrowers under the Sweet vs. McMahon settlement, rejecting the Education Department's bid to delay relief. The decision, handed down Thursday, forces the department to process discharges for borrowers who filed borrower-defense claims between June 23 and November 15, 2022.
The settlement, reached in 2022 under the Biden administration, covers more than 500,000 borrowers defrauded by their schools and provides up to $23 billion in total relief. The Project on Predatory Student Lending, the advocacy group representing borrowers in the case, called it "the largest class-action settlement in American history."
Borrower-defense claims allow students to seek debt cancellation if their school misled them or violated state consumer-protection laws. The original lawsuit, filed in 2019, accused the Education Department of sitting on those applications for years without processing them.