Student loan class actions changed in October 2026 because cancelled loans still appear as owed, delayed Sweet cancellations were cleared to proceed, and the SAVE repayment plan ended. These changes matter because they affect credit scores, discharge timing, and repayment options for hundreds of thousands of borrowers.
Sweet v. McMahon is the borrower-defense settlement for students who say schools misled them and then sought federal loan cancellation. Borrower defense is the federal process that lets defrauded borrowers ask the Education Department to cancel those loans.
Table of Contents
- Why do cancelled loans still show as owed?
- Who is getting Sweet relief now?
- What happened to SAVE borrowers?
- What should borrowers check now?
Why do cancelled loans still show as owed?
On Sept. 24, 2026, borrowers represented by the Project on Predatory Student Lending and Berger Montague filed a proposed federal class action in D.C.
The suit alleges the Education Department still reports $4.6 billion in cancelled loans as owed for more than 300,000 borrowers, according to the Project on Predatory Student Lending filing summary. That false balance can lower credit scores and block mortgages, rentals, and jobs. The harm continues even though the underlying loans were cancelled.
Who is getting Sweet relief now?
A federal court denied the Department's request to delay Sweet v. McMahon relief, clearing long-awaited cancellations for thousands of post-class borrowers. The settlement provides $23 billion in relief to more than 500,000 borrowers defrauded by schools, according to the Project on Predatory Student Lending update. The Ninth Circuit separately rejected the Department's appeal to delay post-class relief.
It held the Department failed to show the legally required changed circumstances from the 2022 settlement it agreed to. Automatic relief does not cover every defrauded borrower. It covers defined groups such as Exhibit C post-class applicants with no decision by Jan. 28, 2026. Other borrowers still need individual borrower-defense applications and are not automatically cancelled.
What happened to SAVE borrowers?
The Department and Missouri approved a joint settlement ending the SAVE income-driven plan. The Department will enroll no new SAVE borrowers and deny pending applications, according to the Department's SAVE announcement. Existing SAVE borrowers will move to other legal repayment plans. Borrowers should watch for a transfer notice and check payment amount, due date, and servicer.
A separate case affects physician associate students. On Oct. 2, 2026, the American Academy of Physician Associates and PA Education Association said their challenge to the Department's classification of PA programs under new federal loan limits moved to its next phase. The outcome affects borrowing eligibility for PA students.
What should borrowers check now?
Pull all three credit reports and look for cancelled loans listed as active. Dispute any false balance with both the servicer and the credit bureau, and keep copies. MarketWatch reported one borrower with $72,000 still shown after cancellation, showing why a report check matters now.
- Confirm Sweet discharge or decision notices and the June 15, 2027 timeline for remaining Sweet discharges
- Confirm SAVE transfer notices and new plan terms before the next due date
- Track PA loan-limit notices if enrolled in or starting a PA program
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