On July 17 the Ninth Circuit refused to give the Education Department another eighteen months to decide whether hundreds of thousands of borrowers were defrauded by their colleges [1]. The department's obligations under a 2022 settlement, the court held, were clear from the beginning, and the department waited three years to object to the deadline it had agreed to [1].
The practical result is that more than 450,000 people are having the rest of their federal student loans erased [1].
The case is Sweet, filed in 2019 as Sweet v. DeVos, recaptioned with each new Education Secretary, and currently Sweet v. McMahon [1]. Its subject is borrower defense to repayment, the statutory right to have a federal student loan discharged when the school that took the money misrepresented what it was selling. The plaintiffs were borrowers whose applications sat unadjudicated. The settlement, agreed in November 2022, was the government's answer to that backlog [1].
It has two moving parts. The first is a list of more than 150 predominantly for-profit colleges, the University of Phoenix among them [1]. Borrowers who attended a school on that list receive automatic relief, without individual adjudication of their claims, on the premise that the pattern of misrepresentation at those institutions was already established. The second part is a window. More than 250,000 borrowers filed applications during a brief period in 2022, and the department committed to reviewing each within a set time or discharging the loan automatically [1]. By the deadline, this administration had processed about 60,000 of them [1].
The department's position deserves to be stated at its strongest, because it is not frivolous. Spokesperson Ellen Keast said the settlement "imposed an unrealistic deadline" and that the department "complied in good faith with court orders" [1]. In court the department argued it needed the eighteen months to "properly review" the pending applications and to ensure that "taxpayer funds are only disbursed to those borrowers who are entitled to relief on the merits" [1]. Both halves of that are real concerns. A discharge moves a liability from a borrower onto the Treasury, and a review process that rubber-stamps is not a review process at all.
The Ninth Circuit did not reject the concern. It rejected the timing [1]. The deadline was in the agreement. The agreement was three years old. Automatic discharge for a missed deadline was the enforcement mechanism the plaintiffs had bargained for in the first place, because the entire complaint was that applications were sitting.
The money is where the public record stops being tidy, and this piece is going to print both figures rather than reconcile them.
The first comes from a court filing in April: roughly $12 billion in loan discharges and refunds, reaching nearly 300,000 borrowers [1]. The second comes from Eileen Connor of the Project on Predatory Student Lending, counsel for the plaintiffs: "At the end of the day, this settlement has impacted over 450,000 people, and it's improved their personal balance sheets by over $23 billion" [1].
Those two do not resolve into a single per-borrower average. Twelve billion dollars across roughly 300,000 people is about $40,000 each. Twenty-three billion across 450,000 is about $51,000 each. The difference between them, roughly $11 billion spread across the roughly 150,000 borrowers not yet paid, would run to about $73,000 each, nearly double the average of the payments already made. The likeliest explanation is that the two numbers measure different quantities. One is money disbursed by a specific date. The other is a lifetime balance-sheet effect described by the plaintiffs' lawyer, and her own phrasing reaches past the discharge itself to what the debt was costing people. NPR's account does not reconcile them, and neither will we. Anyone citing a per-borrower figure from these numbers is inventing one.
What the money is for is easier to state precisely. Jessica Feindt enrolled at the University of Phoenix for an undergraduate psychology degree, finished it in under four years, and borrowed substantially from the federal government to do it [1]. Her recruiter told her the degree would transfer into graduate programs in Michigan [1]. It did not [1]. She filed her borrower-defense claim in 2022 and has now had the debt erased [1]. "I'm really angry about all the years that my family suffered under these loans," she said [1].
That is the shape of the class. These are not people who borrowed for a degree and later regretted the field. They are people who borrowed for a credential described to them as something it turned out not to be, and then carried the loan for the years it took a lawsuit to resolve.
Connor has said the settlement will be "the largest ever against the U.S. government" once the discharges are complete [1]. That is her characterization, and it belongs to her rather than to us. We did not check it against any register of federal settlements and we are not asserting it as a finding.
What the ruling settles is narrow and real: the department has to finish. What it does not settle is when. No public schedule accompanies the remaining discharges, and roughly 150,000 class members are still waiting on relief that has now been promised to them twice, once in a settlement signed in November 2022 and once in an appellate opinion issued on July 17.
