Appeals Court Denies Department of Education’s Request to Delay Settlement Relief in Sweet v. McMahon Borrower Defense Lawsuit
The Ninth Circuit Court of Appeals denied ED’s request for an emergency stay pending appeal, allowing settlement relief to proceed
SAN FRANCISCO (March 26, 2026) – The Ninth Circuit Court of Appeals has denied the Department of Education’s emergency motion to stay a court-ordered deadline in the landmark borrower defense settlement Sweet v. McMahon (formerly Sweet v. Cardona and Sweet v. DeVos).
The decision means that the Department must deliver long-awaited relief to nearly 170,000 post-class applicants (people who submitted a borrower defense application between June 23, 2022, and November 16, 2022) who attended Exhibit C schools and who did not receive a decision on their applications by the January 28, 2026 deadline.
The Department must send notices of eligibility for full settlement relief to this group of post-class applicants by Monday, March 30. Relief must be delivered within one year of that notice. For post-class applicants who did not attend an Exhibit C school, the current decision deadline of April 15, 2026, remains in effect.
“As we said before, the Department cannot stay a deadline that has already passed,” said Eileen Connor, Executive Director and President of the Project on Predatory Student Lending. “This is a major win for borrowers who have spent years in financial limbo while the Department delayed and tried to sidestep a legally binding settlement that it agreed to. Enough is enough. The Department must follow the law, honor the terms of the settlement, and stop these baseless delays so borrowers can finally move forward with their lives.”
The Ninth Circuit has now expedited the briefing schedule on the merits of the Department’s appeal. The Department will file its opening brief on April 9, 2026. As ever, PPSL is prepared to defend the Settlement and fight to ensure that Post-Class Applicants do not wait a day longer for relief than the Settlement allows.
Case Background:
With weeks to go before a settlement deadline in the landmark borrower defense lawsuit, the Department requested an 18-month extension of that deadline, which would have drastically delayed relief owed to nearly 200,000 post-class applicants (people who submitted a borrower defense application between June 23, 2022, and November 16, 2022). PPSL filed a response on behalf of the Plaintiffs, detailing the significant financial harm caused by ongoing delay and uncertainty.
On December 11, 2025, the court ruled that post-class applications involving Exhibit C schools — schools for which the Department identified strong indicia regarding substantial misconduct, whether credibly alleged or in some instances proven — must be adjudicated by the original deadline of January 28, 2026, or be automatically approved. Applications involving Exhibit C schools make up roughly 80 percent of the post-class in Sweet v. McMahon.
At that same hearing, Judge Alsup granted a brief delay for the remaining applications, extending the deadline until April 15, 2026. In his ruling, he called the requested 18-month delay “unacceptable” — acknowledging the stakes for the hundreds of thousands of borrowers who have been living with the financial strain, the emotional toll, and the instability caused by prolonged uncertainty.
On January 22, 2026, the Department of Education again asked the district court to extend the deadline for deciding post-class applications related to Exhibit C schools. PPSL opposed the motion on multiple grounds. Meanwhile, the January 28 deadline passed. According to the final settlement agreement, approved more than three years ago in November 2022, if the Department of Education does not issue borrower defense decisions on the agreed upon timeline, affected borrowers are entitled to full settlement relief.
On February 24, 2026, Judge Gilliam (assigned to the case after Judge Alsup’s retirement) denied the Department’s "eleventh hour” request to extend the deadline. The Department has filed a notice of appeal of both Judge Alsup’s and Judge Gilliam’s orders. The Department did not file its motion for a stay with the appeals court until a month after the January 28, 2026 deadline had passed.
The Named Plaintiffs brought this lawsuit in 2019 on behalf of themselves and all other federal student loan borrowers whose claims for loan cancellation (“Borrower Defense applications”) had been ignored by the Department of Education — many of them since 2015.
The law is clear: students who experienced fraud should not be required to pay back federal loans. Since the Department of Education repeatedly ignored these students’ legal rights, the only way they could have their voices heard was through the courts.
For more information about Sweet v. McMahon and the settlement, visit our website.
About the Project on Predatory Student Lending
The Project on Predatory Student Lending (PPSL) is the leading legal organization representing student borrowers against predatory for-profit colleges and the policies that enable institutions to exploit and cheat students. PPSL uses bold, strategic litigation and advocacy to demand accountability in the higher education space and influence policy solutions to create a more just and affordable education system. PPSL represents more than two million student borrowers and its work has resulted in cancellation of more than $30 billion of fraudulent student loan debt.
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