Ministry of Education betrays 200,000 student loan borrowers | Sweet vs. McMahon

In the more than thirty years that I have worked with people in debt, I have seen shameless behavior from government agencies, but this takes the cake.

The Ministry of Education has agreed to a settlement. The court approved it. The deadlines were clear. And now ED is doing everything it can to avoid providing the relief they promised to students defrauded by predatory schools.

This is not a case of budgetary constraints or administrative challenges. This is a systematic attempt to deny aid to people who have already been victimized once by their schools – and are now being victimized again by their own government.

What the Sweet v. McMahon settlement actually promised

Let’s be clear about what we’re talking about here. The Sweet v. McMahon Settlement (originally Sweet v. Cardona, before that Sweet v. DeVos) would take over $6 billion in aid to borrowers who were defrauded by their colleges.

The settlement covers federal student loan borrowers who submitted credit defense applications that were delayed or mishandled by ED. Under the agreement, which was approved in November 2022, eligible borrowers were promised the following:

• Elimination of the balance of their federal student loans
• Repayments of previous payments on these loans
• Correction or removal of adverse credit reporting

The settlement included specific deadlines. If ED were unable to respond to applications by certain dates, borrowers would automatically receive full relief.

Simple enough, right? Make a decision within the deadline, otherwise the borrower will get what he is entitled to.

ED agreed to this. The court approved it. Appointment made.

Or so everyone thought.

The parade of delaying tactics

Since agreeing to the settlement, the Department of Education has engaged in what I can only describe as a masterclass in bad faith:

According to the Project on Predatory Student Lendingthe Department’s January motion is “directly inconsistent with the language of the settlement agreement and the binding court order approving the settlement.”

In other words, they try to use legal technicalities to avoid going back on their word.

What Judge Alsup said about this

Judge William Alsup, who presided over the case before his recent retirement, minced no words about ED’s conduct.

“They’re very interested in this because the student loan has been hanging over their heads for years, how many decades, destroying their credit. It’s just not right.”
– Judge William Alsup

The judge described the 18-month delay requested by ED as ‘totally unacceptable’.

And he’s right. These aren’t just numbers in a spreadsheet. These are real people who:

• Were misled by predatory schools about job placement rates, accreditation and career prospects
• Took on huge debts for worthless degrees
• Their credit was destroyed as they waited years for decisions
• Relief was promised through a court-approved settlement
• Now look at how the government is trying not to keep that promise

The numbers: more than 200,000 borrowers are stuck

The settlement has already provided relief to more than 271,000 borrowers. But about 200,000 “post-class applicants” – those who applied for credit between June 22 and November 16, 2022 – are still waiting.

Under the settlement terms, if ED does not make a decision by January 28, 2026, these borrowers should automatically receive full compensation: loan forgiveness, repayments and credit restoration.

ED missed that deadline. The lighting should be automatic.

Instead, ED is trying to get it out in court.

Why this matters beyond this case

This is what really bothers me about this situation: If the government does not honor a court-approved settlement, what is the point of a settlement?

These borrowers did not ask for any alms. They were scammed. They jumped through every hoop: submitted applications, provided documentation, waited years. The government acknowledged the fraud and agreed to provide assistance.

Now they are being told they will have to wait longer. And longer. And maybe forever.

What happens next

Judge Alsup has retired and the case is now before Judge Gilliam. A case management conference is scheduled for February 10, 2026.

The legal situation remains uncertain as ED continues to file motions. But in the plain language of the settlement:

• Borrowers from Exhibit C schools who have not received decisions by January 28, 2026 are entitled to full relief
• All other applicants after class must receive decisions or receive automatic waivers by April 15, 2026
• ED’s attempts to change these terms are “in direct conflict” with the binding settlement agreement

What affected borrowers should do

If you’re one of the more than 200,000 borrowers affected by this, here’s my advice:

1. Don’t assume that anything happens automatically. Despite what the settlement says, ED is fighting not to provide relief. Stay vigilant.
2. Document everything. Keep track of when you applied, what communications you received, and when deadlines have passed.
3. Follow the case closely. The Project on Predatory Student Lending has a frequently asked questions page for students and is hosting a webinar on February 26, 2026 at 7:00 PM ET.
4. Don’t give up. The law is on your side. The settlement is on your side. Don’t let bureaucratic obstruction keep you from getting the relief you deserve.

… (Source: Court Filing, Sweet v. McMahon)