Landmark Borrower Defense Case Sweet v. McMahon Becomes Largest-Ever Settlement Against the U.S. Government
With Sweet’s $23 billion settlement, PPSL has secured $50 billion in federal student loan discharges for borrowers defrauded by predatory schools.
BOSTON (July 23, 2026) — The landmark borrower defense case Sweet v. McMahon is now the largest-ever settlement against the U.S. federal government, and the largest class-action settlement in American history, after a federal appeals court rejected the Department of Education's attempt to delay a decision deadline that has triggered automatic relief for more than 170,000 additional borrowers targeted by predatory schools.
Now totaling at least $23 billion in settlement relief, Sweet joins the combined tobacco settlements of 1998 ($246 billion), the combined opioid settlements of 2021 (about $58 billion), and the National Mortgage Settlement of 2012 ($25 billion) as one of the largest consumer settlements in U.S. history overall.
With this development, over the last ten years, PPSL now has secured the cancellation of $50 billion of fraudulent student debt on behalf of borrowers who attended dozens of predatory schools, including ITT Technical Institute, Corinthian Colleges, University of Phoenix, and the Art Institutes.
“This is a huge accomplishment and one that would not have been possible without the tireless efforts of our plaintiffs, the borrower community, and, of course, the small but fierce team at PPSL,” said Eileen Connor, President and Executive Director of the Project on Predatory Student Lending. “But the work isn’t over: to anyone out there struggling with predatory student debt, we see you. And to anyone out there looking to exploit students, we see you too.”
"This case was always about borrowers coming together to stand up for what was right. Through the ups and downs of the last seven years, we became a community united by the belief that what happened to us was wrong, and it became clear just how many people had been harmed by the same broken system,” said plaintiff Theresa Sweet. “With PPSL fighting alongside us every step of the way, we refused to give up. I'm incredibly proud of what we've accomplished together, but this isn't the end of the story. There are still people waiting, and we'll keep fighting until no one is left behind. I hope our fight means that someday no one else has to go through what we did."
More than 1,000 members of the Sweet class are still waiting for loan discharges, refunds, or other relief that the Department of Education was legally required to provide by deadlines that passed between nearly six months and two years ago.
And as the Department has spent recent years fighting the Sweet settlement implementation and gutting its own resources, another backlog of borrower defense applicants has grown to more than 210,000.
Case Background
Sweet v. McMahon (previously Sweet v. Cardona and Sweet v. DeVos) was filed in the United States District Court for the Northern District of California in 2019 by seven named plaintiffs on behalf of themselves and all federal student loan borrowers whose borrower defense applications for loan cancellation had been ignored by the Department of Education.
The Department of Education reached a landmark settlement with borrowers in 2022, agreeing to immediately cancel federal student loans for approximately 200,000 borrowers who attended schools found to have strong indicators of substantial misconduct, and to resolve all remaining class members' borrower defense applications by a series of court-enforceable deadlines. The settlement also established decision deadlines for borrowers who applied for borrower defense between June 23, 2022, and November 16, 2022 (known as the Post-Class), requiring the Department to provide full settlement relief if it failed to issue decisions on time.
Since the settlement was approved, the Department has repeatedly sought to delay those deadlines through motions and appeals, while several for-profit schools unsuccessfully challenged the settlement in court. Courts at every level — including the Supreme Court — rejected those efforts.
On July 17, 2026, a three-judge panel of the Ninth Circuit unanimously rejected the Department's latest appeal, leaving the district court's orders in place and confirming that borrowers whose applications were not decided by the applicable deadlines are entitled to full settlement relief.
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 the cancellation of $50 billion of fraudulent student loan debt.
