Department of Education's deadline slip-up turns into student debt relief for thousands

The administration failed to do good on the deadline that was set by the courts.

PUBLISHED 1 HOUR AGO

Representative image of student loan borrowers. (Image credit: Getty Images | Photo by Paul Morigi)

Good news might be on the horizon for thousands of Americans with student debt, as they might be forgiven after the government missed a crucial deadline. Under a 2022 settlement agreement from the Sweet v. Cardona case, the US Department of Education was given the deadline of January 28 to decide on a large group of borrowers’ Borrower Defense applications this week. Missing that deadline means debt forgiveness could be issued automatically.

UCLA students and supporters demonstrate outside the UC Board of Regents meeting | Getty Images | Photo by David McNew — Representative image of student protestors. (Image credit: Getty Images | Photo by David McNew)

There is an element of uncertainty over who will get the forgiveness, but there is reason for optimism. Under the Sweet v Cardona agreement, the Department of Education was asked to make a decision about a select group of borrowers' applications by January 28, as per a Newsweek report. In that case, the Education Department was accused of improperly denying applications for Borrower Defense to Repayment.

The Borrower Defense to Repayment is a program that was made to protect students who needed to take on debt for higher education. Those who have borrowed money would see their loans cancelled under circumstances of misconduct by the school. This applies to instances of misleading admissions information, including deception about costs, future earnings, and job opportunities.

Representative image of students. (Image source: Pexels | Photo by Stanley Morales)

Several borrowers who had been affected by these circumstances have already had their loans forgiven, but the next group of borrowers was scheduled to have their applications looked at and decided by January 28. Clearly, that did not happen, paving the way for automatic loan cancellations. This applies to those who submitted a Borrower Defense to Repayment application on or before June 22, 2022, and who attended one of the schools specifically listed on the settlement.

Reuben Granger (L) and other job seekers speak with Nicole Bonilla (R), a recruiter for Margaritaville Beach Resort, during the Mega JobNewsUSA South Florida Job Fair. (Getty Images | Photo by Joe Raedle)

Back in November, the Education Department had approached the court hoping to have the January 28 deadline extended. “Due to a variety of circumstances—including most notably the unanticipated size of the post-class pool, the Department’s reasonable but unexpected resource constraints, and the new requirement in certain circumstances that the Department now discharge ineligible loan debt unrelated to a post-class applicant’s borrower defense application—the Court should provide the Department relief from this one aspect of the parties’ comprehensive and otherwise nearly concluded settlement agreement,” the department said.

Representative image of a person walking past the U.S. Department of Education (Image source: Getty Images/Photo by Win McNamee)

However, their request was denied. The department once again asked for an extension until July 2027, but was once again denied. “Defendants are currently required to provide full settlement relief to certain non-class members if Defendants fail to issue timely final decisions on such non-class members’ borrower defense applications by January 28, 2026,” the court noted. “Despite the Department’s good-faith efforts, actual progress was nowhere close to what the Court projected."

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