A legal group representing student loan borrowers in a class action lawsuit are escalating their fight with the Education Department over ongoing delays in providing relief. The department and Secretary of Education Linda McMahon, the group argues, are not discharging the federal student loans for hundreds of borrowers long after the deadlines to provide relief have passed. The group is asking a court to impose sanctions on the department as a result.

The dispute centers on Sweet v. McMahon , a class action legal battle over student loans that has been ongoing for nearly a decade. Borrowers originally filed the lawsuit during the first Trump administration over allegations that the Education Department under then-Secretary of Education Betsy DeVos had unlawfully stalled or denied claims for relief under Borrower Defense to Repayment, a federal program that allows borrowers to discharge their student loans if they can demonstrate they were the victims of school misconduct or fraud.

Under the Biden administration, the Education Department entered into a settlement agreement to resolve those claims. That settlement agreement resulted in one of the largest payouts by the federal government in history, with $23 billion in automatic student loan discharges and refunds of past payments provided to covered borrowers.

But under the second Trump administration, the department has been dragging its feet in providing the required settlement relief under Sweet v. McMahon. The Education Department tried unsuccessfully to further delay discharging student loans under the settlement agreement, arguing that the department needed more time and that automatic student loan discharges were unfair to American taxpayers. Multiple courts rejected these arguments, noting that the government entered into a binding agreement to provide student loan relief to borrowers.

Now, the Project on Predatory Student Lending – the legal group representing the class of student loan borrowers in the case – is arguing that hundreds of borrowers are still waiting to get their student loans discharged, long after they should have been cleared of their debts. The group is pushing a federal court to sanction the Education Department and Secretary McMahon. Here’s where things stand.

Borrowers Were Supposed To Get Their Student Loans Discharged Under Sweet v. McMahon

Under the Sweet v. McMahon settlement agreement, hundreds of thousands of borrowers were entitled to get their federal student loans discharged automatically.

The first group of borrowers, referred to as class members, must have submitted their Borrower Defense to Repayment application before the settlement agreement was finalized in 2022. They also must have attended one of several dozen institutions (mostly for-profit schools) on an approved list referred to as “Exhibit C.” These borrowers would be entitled to full settlement relief including a discharge of their outstanding federal student loans, refunds of prior payments made on those loans, and corrected credit reporting.

“Under the settlement agreement, Full Settlement Relief consists of (i) discharge of the outstanding loans that were the subject of your borrower defense application, (ii) refunds of any amounts you paid to the federal government toward those loans, and (iii) deletion of the credit tradeline associated with those loans from your credit report,” explains the Project on Predatory Student Lending on the group’s website .

Post-Class Applicants Also Face Difficulty Getting Their Student Loans Discharged

Some of the more recent legal wrangling centered on a second group of borrowers in the Sweet v. McMahon settlement called post-class applicants. These borrowers must have submitted their Borrower Defense to Repayment applications during a five month period in 2022 after the settlement agreement was finalized, and before it was approved by the court. These borrowers wouldn’t be entitled to immediate relief; instead, they would be entitled to a good-faith review of their Borrower Defense applications within three years. If the Education Department failed to review their application by the deadline, then these post-class applicants would also be entitled to full settlement relief, including an automatic discharge of their student loans.

The Education Department under Secretary McMahon repeatedly tried to extend the timeline to review the Borrower Defense applications of post-class applicants, but courts repeatedly rejected these requests . All deadlines for the department to review the Borrower Defense applications for post-class applicants have now passed.

“If you are a post-class applicant from an Exhibit C School, you should have received a decision by January 28, 2026,” says the Project on Predatory Student Lending. “If you are a post-class applicant from a non-Exhibit C school, you should have received a decision by April 15, 2026.”

Education Department Failed To Discharge Student Loans For Hundreds Of Borrowers, Group Says

But the Project on Predatory Student Lending is arguing that even for the original class members (not post-class applicants), the Education Department has still not provided full settlement relief to all covered borrowers. Several hundred borrowers, they argue, have still not gotten their federal student loans discharged or their payments fully refunded.

“At least 1,051 members of the Sweet class are still waiting for loan discharges or refunds that the Department of Education was legally required to provide by deadlines that have long since passed,” said the group in an update on its website on Friday. “Some borrowers have been waiting more than a year and a half past the applicable deadline, and additional class members are still missing other forms of relief.”

The legal organization is asking the federal court overseeing the Sweet v. McMahon settlement to order the Education Department to comply.

“Plaintiffs’ Motion to Enforce the Settlement (ECF 552, ‘Motion’) is simple,” wrote attorneys for the Sweet v. McMahon class members in a brief filed in the U.S. District Court for the District of Northern California on Friday. “In the Settlement Agreement in this case, the Department of Education (’Department’) committed to provide Full Settlement Relief to all eligible Class Members by certain deadlines. The Department did not do so. That failure constitutes a breach of the Settlement as to each Class Member whose relief is incomplete and overdue. Pursuant to the Settlement’s enforcement procedures, Plaintiffs seek an order from this Court requiring the Department to promptly provide the missing relief to each affected Class Member on a schedule set by the Court, and to report to Plaintiffs’ Counsel and the Court on its progress of issuing that relief in a manner tailored to ensure accountability.”

Education Department Should Be Sanctioned For Failure To Discharge Student Loans, Says Group

The Project on Predatory Student Lending filed a separate motion with the court requesting sanctions for the Education Department’s failure to comply with the Sweet v. McMahon settlement and provide the required student loan relief, including complete refunds and full discharges of applicable federal student loans. Sanctions are a court-imposed penalty or punishment for defying court orders.

“The Department’s Opposition (ECF 559, ‘Opp.’) takes as its organizing principle that the Department has the discretion to disregard these Orders if it disagrees with them or because, in its unilateral determination, the Orders are improper,” wrote the group in a motion for sanctions filed on Friday. “That is not how court orders work.”

The Education Department and Secretary McMahon have argued they are complying with the Sweet v. McMahon settlement – mostly, at least – and, therefore, should not be subject to any new court orders.

“Defendants have been in substantial compliance with the parties’ Settlement Agreement since at least fall 2024,” the department said in an opposition brief filed earlier this month. “Even if a handful of individual class members dispute, say, the amount of their refund based on their payment history, Plaintiffs’ motion should be denied.”

The Project on Predatory Student Lending pushed back on this, arguing that the ongoing delays are unacceptable, and student loan borrowers who are class members have been waiting long enough. The group is asking the court to require the Education Department to provide detailed data on Sweet v. McMahon class members, the status of all settlement relief (including discharges of student loans and refunds of payments) for each class member, and monetary penalties for each day that the department continues to not comply. A public court hearing is scheduled for November 5.