Education Secretary Linda McMahon speaks to reporters at the White House, Thursday, Nov. 20, 2025, in Washington. A federal appeals court last Friday rejected the Department of Education’s latest efforts to defer payments on federal student loans under the Sweet v. McMahon settlement. (AP Photo/Alex Brandon)
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Borrowers won a major victory Friday after a federal appeals court rejected a challenge to a landmark settlement and required the Department of Education and Education Secretary Linda McMahon to continue making payments on the federal student loans of more than 500,000 Americans. The decision represents the department’s latest loss in the long-running saga. Sweet vs McMahon settlement.
“The courts have once again rejected the Department’s attempts to evade its responsibilities to borrowers who have waited too long to get relief,” said Eileen Connor, president and CEO of the Project on Predatory Student Lending, a legal organization representing student loan borrowers in the United States. Sweet vs McMahon case on Friday. “Today’s decision brings us one step closer to keeping our settlement promise to every borrower, and we will not stop fighting until that promise is realized.”
The decision by the Ninth Circuit Court of Appeals is the culmination of months of unsuccessful efforts by the Trump administration to delay relief payments to student loan borrowers under a landmark 2022 settlement that would provide $23 billion in federal student loan repayment, refunds of past payments and other benefits. Here are the latest developments in Sweet vs McMahon The case means for borrowers.
Education Department seeks deferment of student loan payments Sweet vs McMahon Settlement
Landmark Sweet vs McMahon settlement agreement (at that time the case was called Sweet vs. Cardona) was designed to end a long-running class action brought by thousands of federal student loan borrowers in 2017 who alleged that their applications for loan repayment in borrower defense were improperly denied or delayed by the U.S. Department of Education. The Borrower Defense Program offers borrowers with federal student loans the opportunity to pay off their debt if they can prove that their school engaged in certain types of fraud or other misconduct to persuade them to enroll, such as lying or misleading potential students about career prospects, selective admissions practices, program accreditation, or financial costs.
After several years of litigation, the parties reached an agreement to settle the case in 2022. Under the terms of that agreement, the Department of Education agreed to automatically discharge federal student loans for hundreds of thousands of borrowers who applied for repayment before the agreement was finalized and attended one of several dozen institutions (mostly for-profit schools) on an approved list called “Schedule C.” Class members will also receive other significant benefits, including reimbursement of past payments on covered student loans and adjusted credit reporting. Many of these borrowers are already repaying their federal student loans under the settlement, although some class members are still waiting for relief.
The current dispute centers around the next group of borrowers covered by Sweet vs McMahon settlement called post-course applicants. These are individuals who filed borrower defense claims to repay the debt after the settlement was finalized in June 2022, but before it was approved by the court five months later. Unlike students, these graduates will not be eligible for automatic repayment of their federal student loans. Instead, they will have the right to have the Department of Education make a decision on the merits of their applications within a three-year period. Only if the department fails to meet this review deadline will it be eligible for a full settlement release, including student loan forgiveness, chargebacks, and corrected credit reports.
As the Department of Education approached and then flew past, Sweet vs McMahon decision deadlines for post-course applicants, officials repeatedly tried to delay relief payments to these borrowers, arguing that the department had limited resources and that these federal student loan borrowers were not actually members of the class and therefore should not be eligible for the same relief as other borrowers covered by the agreement. The department argued that if it was forced to pay off the federal student loans of so many applicants who graduated, it would be a windfall for them and, in turn, harm American taxpayers. Several federal courts rejected these arguments, and the administration ultimately appealed to the Ninth Circuit Court of Appeals.
Court of Appeal rejects request to defer student loan payments under Sweet vs McMahon Settlement
On Friday, the Ninth Circuit unanimously rejected the Education Department’s latest request to defer student loan payments for post-graduate students under the law. Sweet vs McMahon settlement. The three-judge panel’s decision follows the court’s earlier denial of the department’s request for an emergency stay this spring.
“DOE has failed to demonstrate ‘significant changes in fact or law’ that would justify modification of the Settlement,” the court said in its ruling. “DOE asserts that the “unexpectedly large number of (P)ost-(C)Class (A) applications”—applications received after the Settlement was entered into (June 23, 2022) but before the date of final approval of the Settlement (November 16, 2022)—represents a “changed circumstance.” However, DOE knew that there were approximately 179,000 post-class assessment applicants at the time of its joint motion with plaintiffs for final approval of the Settlement in September 2022, and it also knew the total number of post-class assessment applicants at the time of the district court’s final decision in November 2022. The number of applicants was more than 205 thousand people. However, the agency did not object to any aspect of this order until the first Rule 60(b) proposal was issued approximately three years later.
The court rejected the department’s arguments that post-graduate applicants are not truly members of the class and that, as a result, they should not be entitled to the same settlement relief (including student loan repayment) as course participants. The court noted that Sweet vs McMahon The settlement clearly provides relief for this group of borrowers.
“We do not need to decide whether applicants, after passing the class, are members of the class because it does not change the results of our review,” the court explained. “DOE voluntarily accepted the obligations set forth in the Settlement Agreement, which expressly applied to candidates who completed the training.”
It is unclear whether the Department of Education intends to appeal the Ninth Circuit’s decision. If that happens, the next and final stop will be the US Supreme Court. It is noteworthy that the Supreme Court refused to stop Sweet vs McMahon facilitating settlement in response to a separate appeal in 2023.
What’s happening with student loan repayments under the settlement?
At this stage, the Department of Education should have notified all course participants and applicants upon completion of the course in accordance with Sweet vs McMahon settlements that have not received a determination on their Defensive Repayment Petition that they are eligible to have their federal student loans discharged.
“If you are a post-graduate applicant from a Schedule C school and have not received a decision by January 28, 2026, you are eligible for a full settlement waiver,” the Project on Predatory Student Lending states on its website. “You must have received notice from the Department confirming your eligibility for full settlement assistance no later than March 30, 2026.”
“If you are a post-graduate applicant from a non-Schedule C school and have not received a decision by April 15, 2026, you are entitled to a full refund,” PPSL continued. “You must have received notice from the Department confirming your eligibility for full settlement assistance by June 15, 2026.”
The last batch of student loan repayment notices were sent to the last group of applicants to graduate in June. PPSL encourages borrowers who believe they should have received a statement notice to carefully check their email inboxes and contact the organization if they do not see it. Sweet vs McMahon Class members and post-graduation applicants must repay their federal student loans within one year of receiving notice of termination.