The federal appeals court in the Ninth Circuit heard arguments on March 20, 2026 about the Education Department’s request to pause implementation of the court-approved Sweet v. McMahon settlement. That settlement, which has been litigated since 2019 and has appeared under names such as Sweet v. DeVos and Sweet v. Cardona, promises debt relief, refunds, and credit corrections to more than 200,000 borrowers who say they were defrauded by colleges. During oral argument, Judge Kim McLane Wardlaw expressed frustration with repeated extension requests, telling the government’s attorney, “The time for negotiating is over. You missed your deadline.”
The dispute centers on a settlement framework that includes firm processing timelines and a specific exhibit known as Exhibit C, a list of 151 institutions the Department identified as showing significant indicators of misconduct. Under the agreement the Department must either issue timely decisions on borrower defense claims or grant relief automatically for qualifying applicants. The relief includes cancellation of federal student loan balances, refunds of prior payments, and correction of adverse information on credit reports. A 2026 FOIA response showed a backlog: about 59% of borrower defense applications remained pending at that time, which is part of the context for the court-ordered timeline.
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Why the Education Department sought more time
Late in 2026 the Department asked U.S. District Judge William Alsup for an 18-month extension to process the pending claims, arguing that the settlement’s schedule could require cancellation of up to $12 billion in loans by January 2026 without adequate vetting. Under Secretary of Education Nicholas Kent conveyed those concerns to the court and reported a processing rate of roughly 1,500 applications per month, with nearly 193,000 applications still undecided. Judge Alsup rejected the extension on December 11, 2026, ordering that claims tied to Exhibit C schools be adjudicated by the original deadline or be automatically approved. The Department missed that deadline on January 28, 2026 and then filed a notice of appeal on February 24, 2026 and a motion to stay in the Ninth Circuit on February 27, 2026.
What the Ninth Circuit hearing could mean
At the March 20, 2026 hearing, the Ninth Circuit considered whether to grant a stay while the Department pursues its appeal. Judge Wardlaw’s sharp comment indicates appellate impatience with repeated delay requests, which may signal a reluctance to allow a prolonged pause in relief. It is important to note that filing an appeal does not automatically suspend lower-court orders: unless the Ninth Circuit explicitly issues a stay, the settlement’s automatic discharge provisions are required to proceed under the agreement. In short, the practical outcome for borrowers depends on whether the panel grants the Department a temporary hold on implementation.
Eligibility and deadlines to watch
Borrowers who filed borrower defense claims and attended one of the 151 schools on Exhibit C face a simple threshold: if they did not receive a decision by January 28, 2026, they are entitled to the settlement’s full relief. The Department was ordered to send notices of eligibility to those post-class applicants by March 30, 2026, and full forgiveness and other covered remedies should be delivered within one year after notice. For post-class applicants who did not attend an Exhibit C school, the Department was required to issue decisions by April 15, 2026. These dates remain in place unless the Ninth Circuit issues a stay that changes the timeline.
Practical steps for borrowers
For people awaiting borrower defense outcomes, the immediate priorities are to monitor official communications and preserve documentation. Watch for a mailed or electronic notice of eligibility from the Department, check account statements to confirm any loan forgiveness or refunds, and review credit reports for corrections tied to the settlement. If you believe you should be covered under the settlement but do not receive a notice, consider consulting a consumer attorney or a qualified borrower-advocacy group. Above all, keep an eye on the Ninth Circuit’s ruling: a denial of the stay would push implementation forward, while a grant would pause relief pending further appellate review.
What the hearing signals for the broader process
Judge Wardlaw’s admonition that negotiation time has passed reflects a broader judicial impatience with prolonged compliance delays. The Ninth Circuit’s decision will shape how quickly the Department must fulfill its contractual obligations under the settlement. Whether the appeal succeeds, the core facts remain: this litigation affects over 200,000 borrowers, implicates up to $12 billion in relief, and involves strict deadlines tied to Exhibit C and other class definitions. Borrowers and advocates should follow the court docket closely as the appeals court issues its ruling.