A massive student loan case just got even bigger. More than 170,000 additional borrowers who say they were misled by for-profit colleges will see $11 billion in federal student debt wiped away, after a federal appeals court refused the Education Department's request for more time to process their claims, reports the New York Times. Under a 2022 settlement reached during the Biden administration in a class-action suit known as Sweet v. Cardona, the government had until early 2026 to rule on these "borrower defense" claims—or automatically cancel the loans. It missed the deadlines.
The case was named for Theresa Sweet, notes CNBC, one of the original plaintiffs, who saw her loan debt swell from $250,000 to $400,000 while the case played out in court. The ruling expands the settlement to nearly 500,000 borrowers and $23 billion in erased debt, which the Project on Predatory Student Lending says is the largest class-action settlement, and the biggest financial settlement against the federal government, in US history. The case targets dozens of mostly for-profit schools accused of using deceptive tactics to recruit students. The Education Department, which says the original timeline was "unrealistic" and that the court "erred" in denying more time, now has one year to complete the discharges. Hundreds of thousands of other fraud claims remain pending, and newer borrowers face tighter rules on relief.
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