Ninth Circuit Rejects Education Department’s Bid To Delay Loan Forgiveness
The United States Court of Appeals for the Ninth Circuit unanimously rejected (PDF file) of the Ministry of Education appeal for deferment of student loan relief for more than 170,000 borrowers under Sweet v. McMahon defense of the borrower settlement, affirming the decision of the district court on July 17, 2026.
The judges found that the department had not shown the “changed circumstances” legally required to change the settlement it agreed to in 2022 and said the agency knew exactly what it was signing up for.
Why is it important?
The settlement is one of the largest government settlements in U.S. history, securing at least $23 billion in federal student loans for more than 500,000 borrowers who said their schools (mostly for-profit colleges) misled or deceived them.
This judgment covers the group of “post-class applicants” who submitted an application borrower defense requirements between the execution of the settlement in June 2022 and its final approval in November 2022. The department missed deadlines to rule on those applications and, under the terms of the settlement, now owes relief to more than 170,000 of them.
What the Court said
The Department of Education argued that the “unexpectedly large number” of after-school applications count as a changed circumstance justifying more time to process loan forgiveness. The panel didn’t buy it, pointing to the record:
- The department knew there were about 179,000 post-class applicants when it jointly asked the court to approve the settlement in September 2022.
- By February 2023, he knew the group had more than 205,000 people.
- He did not raise any objection until the settlement amendment proposal approximately three years later.
The panel cited the Supreme Court’s standard for modifying settlements: “Ordinarily . . . a modification should not be granted where a party relies on events that were actually foreseeable at the time it entered the decree.”
The court also rejected the Department’s argument based on Trump v. CASA, the 2025 Supreme Court decision that limited blanket bans, noting that the Department “voluntarily assumed” settlement obligations that expressly cover after-hours applicants.
How we got here
Earlier this year, on the district court refused to extend the deadline for deciding after-hours applications involving the schools listed on the settlement’s Exhibit Cand allowed only a limited extension (until April 15, 2026) for applications involving other schools. The Ninth Circuit denied the Department’s request for a stay in March 2026. And now, both deadlines have now passed.
In a statement, Eileen Connor, president and CEO of the Predatory Student Lending Projectsaid, “Once again, the courts have rejected the Department’s attempts to avoid its obligations to borrowers who have waited too long for the relief they are owed.
What happens next?
The department must now deliver relief (including full loan discharge) to borrowers under the class whose applications were not resolved on time. He may still seek review by the full Ninth Circuit or the Supreme Court, but has so far lost at every stage of this dispute.
Borrowers not covered by the Sweet settlement may still qualify for others student loan forgiveness programsincluding the borrower’s defense, Public Service Loan Forgivenessand income-driven repayment forgiveness.
How does this connect
We’ve covered it before 200,000 debtors are waiting for this judgmentwith about $12 billion in postsecondary aid at stake. The decision is the latest in a string of liability wins for debtors harmed by their schools, with similar relief as it is Checks for maritime settlements that arrived earlier this year for a special group of delinquent borrowers.
Borrowers who believe their school has defrauded them can learn how the borrower defense process worksand use our student loan debt resources cover repayment options and relief while applications are pending.
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