Borrower Defense to Repayment: Litigation and Regulatory Update
Sam Whittaker, Sherry Gray, and Nick Michiels
April 3, 2026
In recent weeks, key developments in the borrower defense to repayment (“BDR”) process have raised important questions in the higher education community. First, continuing litigation in Sweet v. McMahon (formerly Sweet v. Cardona and Sweet v. DeVos) has created uncertainty regarding the outcome of over 170,000 “post-class applicant” claims filed between June 23 and November 15, 2022. Many institutions responded to these claims between summer 2023 and fall 2025. Second, the U.S. Department of Education (the “Department”) resumed sending notices of BDR claims to institutions in March 2026. These claims were filed by borrowers on or after November 16, 2022 and therefore are not subject to the Sweet settlement agreement nor directly affected by the outcome of that litigation. Below we describe the developments in Sweet and offer observations regarding new claims received in March 2026 and beyond.
Sweet Litigation
Under the terms of the Sweet settlement agreement, the Department agreed to issue final decisions by January 28, 2026 respecting the merits of BDR claims filed between June 23 and November 15, 2022. If the Department failed to decide these post-class applicant claims by January 28, 2026, then the borrower would be entitled to “full settlement relief” including discharge of loans associated with attendance at the school, a refund of amounts previously paid on the loan, and credit repair. In November 2025, as it became clear the Department would not meet the decision deadline as to most claims, the agency filed a motion seeking relief from the judgment—specifically, the Department asked the district court to grant an 18-month delay to allow adequate time to issue a decision on the merits of post-class applications.
