170,000 Borrowers Qualify for Student Loan Forgiveness. Here's Who's Eligible.
More than 170,000 federal student loan borrowers are set to have their debt wiped out after a federal appeals court ruled against the Trump administration's attempt to delay the relief, expanding a long-running settlement over allegations that for-profit schools defrauded their students.
The July 17 ruling came from the 9th U.S. Circuit Court of Appeals, which upheld a district judge's earlier decision denying the Education Department's request for an additional 18 months to review the remaining claims. The case stems from the federal Borrower Defense program, which allows students to seek loan forgiveness if their colleges misled them or engaged in fraud, including misleading claims about graduation outcomes, job placement or future earnings.
A Settlement Years in the Making
The underlying lawsuit was originally filed in 2019 on behalf of borrowers who accused the Education Department of leaving borrower defense applications unresolved for years.
Under a 2022 settlement reached during the Biden administration, the government agreed to resolve thousands of pending claims filed before June 22, 2022, or automatically grant relief if it failed to act by early 2026. After missing that deadline earlier this year, the Trump administration asked courts for more time to review the remaining claims, a request that was ultimately denied and then upheld on appeal.
With this latest round, the settlement's total value has grown to roughly $23 billion in forgiven debt across nearly 500,000 borrowers combined. The Education Department did not immediately comment on the ruling.
Other Changes for Borrowers
Separately, the Education Department announced that federal student loan borrowers enrolled in automatic payments would be eligible for a temporary 1% interest rate reduction beginning July 1. Borrowers already enrolled in autopay, or who sign up by Sept. 30, 2026, will receive the reduced rate through June 30, 2028.
A department spokesperson framed the change as part of a broader effort to help borrowers navigate their options. "No matter your age or college credential, we want to make sure that borrowers can understand their options and choose a repayment option that works best for them," the spokesperson said.
Part of a Long History of Debt Relief Actions
This isn't the first major round of relief tied to federal loan forgiveness programs. Under the Biden administration, the Education Department previously canceled $7.7 billion in debt for roughly 160,000 borrowers in one round alone, covering people who qualified through Public Service Loan Forgiveness, the SAVE income-driven repayment plan, and other administrative adjustments. At the time, officials said the total number of borrowers who had benefited from various debt cancellation actions had reached 4.75 million people, with roughly $167 billion forgiven overall.
For borrowers wondering whether they qualify under this latest ruling, the Education Department is expected to notify eligible individuals directly as claims are processed following the court's decision.
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