SAN FRANCISCO (May 22, 2025) – A significant legal hurdle has been cleared for hundreds of thousands of student borrowers seeking relief from loans tied to alleged school misconduct. The Ninth Circuit Court of Appeals has denied a petition for an en banc re-hearing filed by Everglades College, Inc.
This decision upholds a previous ruling by a three-judge panel of the Ninth Circuit in November 2024, which went against Everglades and two other intervening schools, Lincoln Educational Services Corporation and American National University. These institutions had sought to overturn the large-scale settlement reached in the class action lawsuit known as Sweet v. McMahon.
The Sweet settlement, which received final approval from the U.S. District Court for the Northern District of California in November 2022, is a landmark agreement. It mandates the cancellation of more than $6 billion in student loans, providing relief to over 500,000 borrowers across the nation.
For the borrowers involved, this settlement offers a pathway to clear debt that they argue resulted from their schools’ misrepresentations or other misconduct. The legal battle has centered on whether these schools could intervene to block the relief promised to students.
The intervening schools, including Everglades, have consistently challenged the settlement since its approval. Their attempts to halt its implementation have been unsuccessful to date, facing denials at multiple levels.
Eileen Connor, President and Executive Director of the Project on Predatory Student Lending (PPSL), a leading legal organization representing student borrowers in this case, welcomed the Ninth Circuit’s latest denial. She emphasized the court’s consistent findings regarding the schools’ lack of standing in the matter.
“This decision reaffirms what the Ninth Circuit panel found and what we’ve known all along: the intervenors have no place in this case and the settlement must continue to move forward as it has been doing for the past two and a half years,” Connor stated.
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She highlighted the fundamental nature of the lawsuit, explaining, “This case is about student borrowers who petitioned the government for loan cancellation on the basis of their schools’ misconduct. The law is on their side and the meritless appeals of a few desperate companies will not stop our clients from getting the settlement relief they are owed.”
The legal challenges initiated by the intervening schools have a history of being rebuffed by the courts. Shortly after the settlement received final approval in November 2022, the three schools filed notices of appeal on January 13, 2023.
They also requested the District Court to issue a stay, which would have paused the implementation of the settlement while their appeals were considered. U.S. District Judge William Alsup denied this motion to stay in February 2023.
Judge Alsup’s denial was critical, as it allowed the Department of Education to proceed with the implementation of the settlement terms according to the agreement. This meant that even as the schools pursued appeals, the process of providing relief to borrowers could begin.
Undeterred, the intervenors escalated their efforts, petitioning the Supreme Court of the United States in April 2023 for a stay of settlement implementation. This high-level bid to pause the debt cancellation also met with a swift denial from the nation’s highest court.
Following these initial setbacks, the schools’ primary appeal proceeded before a three-judge panel of the Ninth Circuit. In November 2024, that panel delivered a ruling denying their appeal, affirming the validity of the settlement and rejecting the schools’ arguments against it.
It was after this panel decision that Everglades College sought the en banc rehearing, a request for the case to be heard before a larger assembly of the Ninth Circuit judges. The denial of this petition on May 22, 2025, signifies another definitive rejection of the schools’ efforts to derail the settlement.
The Ninth Circuit’s latest decision specifically underscores that the intervenors lacked standing to appeal the settlement in the first place. This legal concept, standing, requires a party to demonstrate a sufficient connection to and harm from the law or action challenged to support their participation in the case.
The court found that these schools had no protectable legal interest in the litigation between the student borrowers and the government. Their attempts to insert themselves into the case and overturn a settlement designed to resolve borrowers’ claims based on the schools’ actions have been consistently found by the courts to be without a proper legal basis.
The settlement itself is a culmination of claims brought by students who attended various institutions and asserted that their schools engaged in misconduct that entitled them to loan cancellation under federal regulations.
The Project on Predatory Student Lending has been instrumental in advocating for these borrowers. As their legal representative, PPSL focuses on strategic litigation and advocacy to hold predatory for-profit colleges accountable.
The organization’s work aims to influence policy and create a more just and affordable education system for students. PPSL represents a large number of student borrowers, totaling over one million, and their efforts have contributed to the cancellation of more than $22 billion of fraudulent student loan debt across various cases.
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