A federal appeals court ruling has cleared the way for the U.S. Education Department to cancel about $11 billion in student loan debt for more than 170,000 borrowers covered by a class-action settlement.
The 9th U.S. Circuit Court of Appeals rejected the department’s request for an 18-month extension to process remaining borrower-defense claims. The settlement required automatic relief for certain borrowers if the government missed review deadlines in early 2026.
The case stems from a 2019 lawsuit filed by borrowers who said the Education Department had unlawfully delayed or denied claims alleging that their colleges misled them or violated state law. Borrower defense is a federal process that can erase loans when a school engaged in qualifying misconduct.
A 2022 settlement established groups and timelines for resolving applications filed before June 22, 2022. Some borrowers associated with listed schools were entitled to automatic relief, while others were promised decisions within set periods.
The administration sought additional time to complete the work, but the appeals court left the settlement deadlines in place. As a result, borrowers whose covered claims were not decided on time are eligible for discharge under the agreement.
The latest relief is expected to total roughly $11 billion for more than 170,000 people. Across all groups, the settlement has been projected to provide about $23 billion in relief to nearly 500,000 borrowers.
Eligible borrowers should receive information from the Education Department or their loan servicer. They should verify messages through official federal channels and remain alert for companies that demand payment to apply for relief.
The ruling concerns borrowers included in the settlement and does not create blanket cancellation for all federal student loan holders.
