Nearly half a million Americans who say predatory colleges lied to their faces are finally getting their student loan debt wiped out, to the tune of $23 billion, after a lawsuit so long it has outlasted three presidential administrations and burned through three different education secretaries. The Trump administration fought it until a federal appeals court told them, essentially, that they had waited three years to complain about the rules and could now sit down. One borrower logged into her account last week, saw a zero balance, and said she felt angry instead of happy. That about covers it.
A Lawsuit That Refused to Die
The case is called Sweet v. McMahon right now, but it started life as Sweet v. DeVos back in 2019 when the first Trump administration was still treating student debt relief like it was a personal insult. The class-action suit centered on something called borrower defense, a federal rule that's supposed to let students petition the Education Department to cancel their loans if a school defrauded them. The claim was straightforward: then-Secretary Betsy DeVos had deliberately and illegally stopped processing those fraud claims and denied others without even looking at the merits.
The lawsuit won. Then it had to keep winning. The Biden administration agreed to a landmark settlement in 2022, pledging automatic full relief to borrowers who had attended more than 150 mostly for-profit schools. It also opened a post-settlement application window for an additional 250,000-plus borrowers, with a deadline built in: review their claims on time or discharge the loans.
According to NPR, the second Trump administration processed exactly 60,000 of those post-settlement applications by the court-appointed deadline. There were more than 250,000 of them. They then argued they needed another 18 months to properly review the rest, framing it as fiscal responsibility, protecting taxpayer funds, all the greatest hits. The U.S. Court of Appeals for the 9th Circuit was not moved.
The Court's Message Was Pretty Clear
In a July 17 ruling that NPR reports likely ends the legal fight for good, the 9th Circuit told the Education Department that the settlement obligations had been spelled out years ago and the department had simply waited three years to object to them. That is not a legal strategy. That is a stall.
The Education Department's spokesperson Ellen Keast told NPR the settlement had "imposed an unrealistic deadline" and that the department had "complied in good faith with court orders." Which is a creative reading of processing 60,000 out of 250,000 applications before a deadline you agreed to.
Once all the discharges and refunds are completed, Eileen Connor, executive director of the Project on Predatory Student Lending, the group that originally filed the suit, told NPR this will be the largest settlement ever against the U.S. government. Twenty-three billion dollars. Nearly 450,000 people. Seven years of fighting.
What These Schools Actually Did
It is worth being specific about what we are talking about here, because "fraud" can feel abstract until you hear what it actually looked like. Jessica Feindt, who lives near Flint, Michigan, enrolled at University of Phoenix because it was on every radio station, every newspaper, everywhere she looked. She was one of the first in her family to go to college. She took out federal loans because, as she told NPR, "poor people cannot get private loans."
Her school's recruitment counselor told her that her psychology degree would be accepted by Michigan graduate programs she wanted to attend. It wasn't. She earned the degree, accumulated the debt, and then discovered the credential she had been sold did not do what she had been promised it would do. In 2022, she filed a borrower defense claim as part of that post-settlement group.
Last week, she logged into her federal student loan account. The balance was gone. "I feel like I should be happy," she told NPR, "but I'm really angry about all the years that my family suffered under these loans." That is not ingratitude. That is an entirely rational response to having your life bent out of shape for years by a preventable fraud that the government then spent additional years refusing to fix.
The Scale of the Predatory School Racket
The for-profit college industry's business model, at its worst, was elegant in a deeply ugly way. Target people with limited options and big dreams, people who often have never set foot in a college and don't know what questions to ask. Promise them credentials, career prospects, transferable credits. Collect the federal loan money upfront. Leave the student holding debt that a degree mill diploma can't service.
Eileen Connor compared these loans to Big Tobacco in comments to NPR, calling them "toxic products." That framing is not hyperbolic. Cigarette companies also marketed heavily, also targeted specific demographics, also had a product that destroyed people's financial and personal health over years, and also required decades of litigation before anyone was held meaningfully accountable.
The Education Department's own court filings, as NPR reports, reveal the department had already provided $12 billion in discharges and refunds to nearly 300,000 borrowers before the latest ruling. After July 17, that number grows considerably. The predatory school machine took in far more than it will ever pay back, but at least some of the people it chewed up are getting out.
The Dingo Take
You are supposed to believe that the Trump administration's objection here was principled fiscal stewardship, a righteous defense of the taxpayer. What actually happened is that an administration that blew up the federal government's student loan infrastructure, gutted the Education Department, and spent its first months in office trying to strangle debt relief programs across the board missed a deadline it had agreed to by a factor of four and then asked for eighteen more months to finish the job. The court said no.
The real story underneath this settlement is that the federal government ran a student loan program for decades that funneled billions into predatory schools while giving defrauded borrowers a process deliberately designed to make them give up. Sweet v. DeVos began because the department wasn't processing claims. Sweet v. McMahon nearly ended because the department wasn't processing claims. Different administration, same playbook, different judge.
Jessica Feindt spent years in debt for a degree that couldn't get her into the graduate programs she wanted. She is now debt-free and furious, which is the correct order of things. The $23 billion figure sounds enormous until you consider what these schools took, what these borrowers lost in the intervening years, and how many people are still waiting. The settlement is a win. The anger is justified. Don't let anyone tell you these are contradictions.
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