US Court Clears Debt Relief for Hundreds of Thousands of Student Loan Borrowers

A three‑judge panel of the U.S. Court of Appeals for the Ninth Circuit issued a unanimous decision on 17 July 2026, rejecting the Education Department’s request to delay the Sweet v. McMahon settlement. The ruling automatically cancelled federal student loans for roughly 450,000 borrowers who had been defrauded by for‑profit colleges, expanding the total class‑action relief to about 500,000 borrowers and $23 billion in debt forgiveness – the largest settlement of its kind against the federal government.

The settlement, originally reached in 2022 after a lawsuit by the Project on Predatory Student Lending, targets borrowers who attended dozens of predatory schools such as the University of Phoenix. Borrowers like Jessica Feindt of Michigan expressed mixed feelings, saying, “I should be happy, but I’m really angry” about the years of uncertainty. Eileen Connor, executive director of the nonprofit group that represented the borrowers, likened the case to the historic tobacco settlement.

The Education Department had asked for an 18‑month extension to review pending claims, arguing that automatic payouts would burden taxpayers, but the appellate court held the department had already voluntarily undertaken its obligations under the settlement. The decision removes the final barrier to full debt relief for the affected borrowers.