The Education Department is set to erase approximately $23 billion in federal student loans for about 450,000 borrowers who were defrauded by predominantly for-profit colleges. A federal appeals court rejected the Trump administration's final attempt to delay this relief, compelling the department to complete all discharges by June 15, 2027. The average amount forgiven per borrower is around $48,000.

This relief stems from the lawsuit *Sweet v. Mc Mahon*, initially filed in 2019. The suit alleged the Education Department had failed to process borrower defense applications, which allow students defrauded by their schools to seek loan discharge. The Biden administration agreed to a class-action settlement in November 2022, promising automatic full relief for borrowers who attended over 150 listed schools and opening a window for additional claims.

A Ninth Circuit ruling on July 17, 2026, denied the department's appeal to delay relief for over 170,000 post-settlement borrowers, finding the government had not demonstrated sufficient grounds to modify the agreed-upon settlement timeline. This decision unlocks relief for the remaining borrowers, bringing the total eligible under the settlement to approximately 450,000. Discharged debts under the Borrower Defense program remain federally tax-free.