A federal appeals court has left intact a settlement requiring the U.S. Department of Education to erase federal student-loan debt and provide related relief to hundreds of thousands of borrowers who said their colleges misled them. The latest reporting puts the number affected at more than 450,000 and the settlement’s value at more than $23 billion, making Sweet v. McMahon one of the largest education-related consumer relief cases in U.S. history.

The development follows a July 17 decision by a unanimous three-judge panel of the U.S. Court of Appeals for the Ninth Circuit. The panel affirmed a lower court’s refusal to modify the 2022 settlement and rejected the department’s argument that an unexpectedly large number of applications and complications involving consolidated loans justified more time.

The court said the department knew there were about 179,000 “post-class” applicants when it sought final approval of the agreement in September 2022, and knew by February 2023 that the total exceeded 205,000. Despite that knowledge, the panel said, the agency did not seek to change the settlement’s deadlines until roughly three years later. The appeals court concluded that the department had not shown the significant change in circumstances required to revise a final judgment.

The settlement grew out of a class-action lawsuit filed in 2019 by borrowers who alleged that the Education Department had unlawfully delayed or summarily denied applications under the federal borrower-defense program. Borrower defense allows people to seek cancellation of federal education loans when a school’s misconduct—such as false claims about job placement, earnings, accreditation or the transferability of credits—caused financial harm.

In 2022, the department agreed to a court-enforceable framework that divided borrowers into several groups. About 200,000 class members who attended more than 150 schools listed in an exhibit to the agreement were promised full, automatic relief. That relief can include cancellation of qualifying federal loans, refunds of certain payments made to the government and removal of the affected loan tradelines from credit reports.

Other class members were entitled to individual decisions on fixed schedules. The agreement also covered people who submitted borrower-defense applications between June 23 and mid-November 2022, generally known as post-class applicants. If the department failed to decide those applications by the applicable deadlines, the settlement required full relief.

The Education Department sought an 18-month extension, arguing that it needed additional time to conduct merits reviews and protect taxpayer funds. In a statement reported by NPR, a department spokesperson said the settlement imposed an unrealistic deadline and that the agency believed the court should have granted its request. The Ninth Circuit, however, found no abuse of discretion in the lower court’s decision to enforce the agreement as written.

The ruling does not create a new, open application period. Eligibility depends on a borrower’s existing borrower-defense filing, when it was submitted, the school involved and the relief category established by the settlement. Borrowers who never filed a covered application cannot newly join the Sweet settlement simply because they attended one of the named institutions.

Federal Student Aid says Sweet class members with pending borrower-defense applications, or approved claims awaiting complete discharge, are not required to make payments on the covered loans while the process is pending. Borrowers who receive a payment notice in error are directed to contact their servicer and review their status through StudentAid.gov. The settlement concerns federal loans; private education debt is not automatically canceled through borrower defense.

Implementation remains the central issue. NPR reported that the department had already provided about $12 billion in discharges and refunds to nearly 300,000 borrowers before the latest appeals ruling. The Project on Predatory Student Lending, which represents the borrowers, says the broader settlement has secured at least $23 billion in relief. Public borrower counts vary depending on whether pending post-class applicants and other settlement groups are included, but the scale is clearly well above 450,000 people.

For affected borrowers, the relief can change more than a monthly payment. A discharged balance may lower debt-to-income ratios used in mortgage and auto lending, eliminate collection risks and remove negative loan information associated with the covered debt. Refunds, where required, can also return money previously paid to the Education Department. The precise result differs by borrower because loan amounts, payment histories and consolidation records vary.

The case also carries consequences for higher-education oversight. Many of the institutions identified in the settlement were for-profit colleges accused by borrowers or government authorities of aggressive recruiting and misleading claims. Several have closed. The agreement does not mean every school on the list admitted wrongdoing, but it reflects the government’s decision to resolve a vast backlog through automatic relief and enforceable timelines rather than continue years of individual litigation.

Sweet v. McMahon has crossed three presidential administrations and changed names with each education secretary: Sweet v. DeVos, Sweet v. Cardona and now Sweet v. McMahon. The long timeline underscores how slowly borrower-defense claims can move when the department faces large application backlogs, shifting regulations and litigation over the scope of federal loan-cancellation authority.

The July ruling is especially significant because the court treated the department’s earlier promises as binding despite the agency’s later operational objections. The panel noted that difficulty performing a settlement does not by itself justify rewriting it, particularly when the party seeking relief understood the scale of the obligation and repeatedly assured the court it could meet the deadlines.

Borrowers should rely on official notices from the Education Department or their federal loan servicer, keep contact information current and avoid companies demanding fees to obtain settlement relief. Covered borrowers generally do not need to pay a third party to secure a discharge required by the court order. Those unsure whether they are included can review the Sweet settlement information on StudentAid.gov and verify the filing date and status of their borrower-defense application.

The appeals decision removes the administration’s latest attempt to postpone relief, but the practical finish line will be measured by completed account adjustments, refunds and credit corrections. Courts can enforce the settlement, and borrower advocates have said they will continue monitoring compliance until all required relief is delivered.