Education Department faces court push over student-loan relief delays

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Education Dept. student-loan relief delays

Highlights

The Project on Predatory Student Lending filed a motion seeking a court order for the Education Department to immediately provide relief to over 1,000 Sweet v. McMahon settlement class members.
The Education Department disputes the allegations, noting reviews of unresolved claims have been underway since April 2024, with more staff joining in 2025.
A public hearing on November 5 may lead to court-ordered enforcement or penalties, affecting the ongoing processing of one of the largest U.S. student-debt relief settlements.

Settlement enforcement dispute intensifies

As first reported by Business Insider, the Project on Predatory Student Lending has filed a new motion seeking to force the U.S. Education Department to comply with deadlines in the Sweet v. McMahon settlement. The borrower advocacy group says the department has not yet provided relief to over 1,000 settlement class members, despite legal deadlines that it says expired long ago.

The motion asks the court to enforce the settlement, hold the department in contempt, and require the agency to resume weekly meetings with plaintiffs' counsel to provide status updates on relief processing. It also asks the court to impose penalties if the department does not comply with the settlement terms.

In July, a federal court denied the Trump administration's request to delay relief under the settlement. The case stems from a lawsuit first filed in 2019 by student-loan borrowers who accused the department of failing to process borrower defense to repayment claims, which can erase debt for students who say they were defrauded by their schools.

Department defends review process

The Education Department says the new motions are baseless and disputes that the delays amount to agency failure. In a declaration, the department's ombudsman says some borrowers still awaiting refunds have accounts that warranted further review.

According to that declaration, current staff have been reviewing and resolving Sweet complaints since approximately April 2024, with additional staff added in 2025. The settlement was reached under the Biden administration in 2022, and while many borrowers have already received relief, the remaining delays continue to leave part of the class without finalized discharges or refunds.

A public hearing in the case is scheduled for November 5. The outcome could determine whether the department faces court-ordered enforcement measures as it continues processing one of the largest student-debt relief settlements in the U.S.

Our earlier article on Chariot Claims’ $10 million Series A explained how the legal-tech startup is scaling tools that help law firms process high-volume consumer disputes, from intake questionnaires to AI-assisted case review. We noted that demand for faster, more automated claim screening is rising as mass arbitration and other bulk claim models expand—an approach that mirrors the operational strain seen when agencies and courts must process large numbers of individual relief decisions.

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