Court ruling clears path for student loan relief for more than 500,000 borrowers

More than 500,000 federal student loan borrowers are set to receive debt relief after a federal appeals court ruled that the U.S. Department of Education must honor the terms of a long-standing settlement involving borrowers who said they were misled by their colleges. The 9th U.S. Circuit Court of Appeals rejected the department’s request to delay the relief, allowing loan discharges to move forward.

The ruling applies to borrowers covered under the Sweet v. McMahon settlement (formerly Sweet v. Cardona), a class-action lawsuit involving the federal Borrower Defense to Repayment program. The program allows borrowers to seek loan forgiveness if their schools engaged in misconduct, such as making false claims about job placement, accreditation or educational quality.

Eligible borrowers will receive federal student loan cancellation, refunds of qualifying payments already made and corrections to their credit reports. The decision does not apply to all federal student loan borrowers, but rather to a specific group who filed approved Borrower Defense claims or whose applications were not processed within the required time frame.

Borrowers wondering whether they qualify can log in to their StudentAid.gov account to check the status of any Borrower Defense application and update their contact information. Those covered by the settlement are also expected to receive notification from the U.S. Department of Education, and should check their email—including spam and junk folders—for any messages regarding their eligibility or loan discharge.