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Nearly 500,000 federal student loan borrowers are finally seeing the end of a tumultuous legal journey as a recent court decision concludes a long-standing lawsuit. The case, which spans three different U.S. presidential administrations, revolves around claims of deceptive practices by colleges.
Originally filed during the Trump administration, the class-action lawsuit challenged the handling of the borrower defense rule. This regulation allows borrowers to seek loan forgiveness if their college misled them about critical factors such as job prospects and credit transferability.
Under former Education Secretary Betsy DeVos, borrowers alleged delays and wrongful denials in processing their claims, prompting advocates to sue the department over these practices. The lawsuit, known by various names as administrations changed, highlighted alleged deliberate inaction by the department.
“At the end of the day, this settlement has impacted over 450,000 people, and it’s improved their personal balance sheets by over $23 billion,” said Eileen Connor, executive director of the Project on Predatory Student Lending (PPSL), the advocacy group that initiated the lawsuit.
Loan Forgiveness Takes Shape
In 2022, the Biden administration took a significant step by agreeing to a settlement that promised relief to borrowers from over 150 primarily for-profit colleges. This agreement also allowed an additional 250,000 borrowers to apply for relief, with a set timeline for processing their claims.
However, the processing of these applications lagged, with only 60,000 reviewed by the court-imposed deadline. The Education Department requested more time, citing the need for thorough evaluations to ensure rightful disbursement of taxpayer funds.
A pivotal July ruling from the U.S. Court of Appeals for the 9th Circuit dismissed these concerns, pointing out that the department had ample time to raise objections earlier.
Personal Stories of Struggle
Jessica Feindt, a borrower from Flint, Michigan, is one of many who have felt the financial strain. After enrolling at the University of Phoenix, she was misled about her degree’s acceptance by local graduate programs. Her loans became burdensome, despite her efforts to pay them off.
“I feel like I should be happy,” Feindt remarked, expressing mixed emotions after her loans were discharged following the recent court developments. “But I’m really angry about all the years that my family suffered under these loans.”
The Education Department’s filings revealed that nearly 300,000 borrowers had received over $12 billion in loan discharges and refunds after the 2022 settlement. The recent court decision is expected to increase this figure significantly.
Connor compares these predatory student loans to “toxic products,” akin to the historic litigation against Big Tobacco, underscoring the severity of the situation borrowers faced.
Edited by: Nicole Cohen
Research by: Will Chase
Copyright 2026 NPR
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