About 30,000 borrowers were notified that roughly $12 billion in student loans have been discharged under the Sweet v. McMahon settlement ahead of a June 15 deadline. The discharges are part of a three‑phase process — about 450,000 applications have been approved since 2023, and phase three covers roughly 208,000 borrowers. The case stems from borrower complaints to the Department of Education’s Borrower Defense program and follows 2022 court rulings in favor of plaintiffs. Broader relief efforts, such as the SAVE repayment plan, were halted after a separate court challenge, leaving many borrowers still facing long‑term financial impacts.
Goodbye, Student Loans: 30,000 Borrowers Receive $12B in Cancellations Ahead of June 15 Deadline
Around 450,000 student loan discharge applications have been approved since notices were first sent out in 2023, including the latest round of 30,000 approvals (Getty Images)
About 30,000 federal student loan borrowers were notified last week that their loans had been discharged as part of a multi‑phase settlement tied to the class-action case Sweet v. McMahon. The Project on Predatory Student Lending — a legal advocacy group representing students who say they were misled by predatory colleges — said the canceled loans total about $12 billion, citing Department of Justice figures.
What Happened
Discharges, the formal term for loan cancellations, are being issued in phases under the Sweet v. McMahon settlement. Since notices began going out in 2023, roughly 450,000 discharge applications have been approved. The most recent batch — approximately 30,000 approvals — arrived ahead of a key June 15 deadline.
Details of Phase Three
According to the advocacy group, phase three of the settlement covers about 208,000 borrowers. About 150,000 people in that group have already received discharge notices, leaving roughly 48,000 applicants still awaiting a decision. The recent approvals are part of this third phase.
Legal Background
Court rulings in 2022 favored borrowers, and attempts by the Department of Education to delay parts of the settlement were unsuccessful. Plaintiffs in the litigation originally filed complaints through the Department of Education’s Borrower Defense program and later sued after those claims went unaddressed.
Secretary of Education Linda McMahon is the subject of a lawsuit from student loan borrowers that has resulted in the discharge of $12 billion in student loans (AFP/Getty)
“Through the settlement, we’ve delivered relief to students whose decisions to borrow student loans were based on false pretenses,” The Project on Predatory Student Lending said in a statement. “These loans never should have been made in the first place.”
How Borrower Defense Works
The Borrower Defense program lets borrowers seek discharge if a school "misled" students or engaged in misconduct that violated federal laws or regulations. The remedy is available only when federal student loan funds were used at the institution in question.
Broader Context
The settlement comes amid wider turbulence in federal student loan policy. The Biden administration’s SAVE repayment plan — which had reduced monthly payments and created a new pathway to forgiveness for qualifying borrowers — was blocked after a successful lawsuit by seven states, affecting more than seven million enrollees. That ruling ended hopes for broader relief through that specific plan.
Meanwhile, total U.S. student loan debt — federal and private combined — reached about $1.87 trillion in March, according to a Fidelity study. Fidelity’s research links high student debt to delayed home purchases (about one‑third of borrowers), increased financial anxiety (41 percent), and materially lower retirement savings: employees age 50+ with student loans have retirement account balances roughly 30 percent lower than peers without loan debt.
What’s Next
The Independent has requested comment from the Department of Education. Thousands more borrowers remain in the queue for discharge decisions under phase three, and advocates say additional approvals will continue as applications are processed. Affected borrowers should watch for official emails and verify any notices through their loan servicer or the Department of Education’s portals.
Help us improve.
