The U.S. Department of Education has begun notifying roughly 30,000 federal student loan borrowers that their debt will be canceled under a court-approved settlement tied to borrower defense claims alleging school misconduct, according to Forbes.
Emails began going out June 12, confirming borrowers are eligible for relief under the settlement in Sweet v. McMahon, formerly Sweet v. Cardona. The agreement covers borrowers whose applications were not processed by an April 15 court-ordered deadline.
🚨 We're hearing that some Post-Class Applicants who attended a non-Exhibit C school and are entitled to full settlement relief have started receiving notices from @usedgov
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The Department has until June 15 to send these notices.
In the meantime, be sure to check all inboxes… pic.twitter.com/20BOKLxF3r— Project on Predatory Student Lending (@EdDebtJustice) June 12, 2026
Under settlement terms, the Education Department must discharge eligible federal student loans, issue refunds for qualifying payments made directly to the government, and remove associated negative credit reporting within one year of notification.
The relief follows a
March 26 ruling by the 9th U.S. Circuit Court of Appeals, which rejected the department’s request to delay implementation. The decision allowed broader discharge efforts affecting about 205,000 borrowers whose borrower defense applications had remained unresolved for years.Borrower defense rules allow federal loan borrowers to seek cancellation if they can demonstrate their school misled them or engaged in substantial misconduct related to educational programs.
The underlying lawsuit, filed in 2019, accused the Education Department of failing to act on hundreds of thousands of pending claims. A 2022 settlement established more than $6 billion in potential relief for eligible borrowers tied to specific institutions or long-delayed applications.
According to the outlet, the Education Department said: “Despite its best efforts, ED could not respond to your application on or before Apr. 15, 2026.” It added that relief will be processed within one year unless further court action intervenes.
Officials have not announced a timeline for additional discharge waves beyond the approximately 30,000 borrowers currently receiving notices.
Advocates for student loan borrowers have said the settlement represents one of the largest borrower defense relief efforts in recent years. However, implementation timelines continue to depend on court oversight and the Education Department’s administrative processing capacity.
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