Higher Education Institutions Face New Borrower Defense Claims Amid Ongoing Litigation and Regulatory Changes
Higher education institutions are encountering new borrower defense to repayment (BDTR) claims as the U.S. government navigates a class action settlement and regulatory shifts. A settlement from June 2022 mandates loan discharges for certain 'Exhibit C' schools and deadlines for claims. In December 2025, a court denied the Department of Education's request for an extension on claims adjudication. As of early March 2026, new BDTR claims have emerged that fall outside the Sweet settlement, and ongoing litigation affects regulatory frameworks governing these claims.
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Higher education institutions are experiencing a surge of new borrower defense to repayment (BDTR) claims. This follows a June 2022 settlement where the U.S. Department of Education agreed to discharge loans for borrowers from designated 'Exhibit C' schools and set deadlines for claims processing.
In December 2025, a court upheld a January 2026 deadline for adjudicating these claims, while denying further extensions due to insufficient progress on nearly 200,000 pending applications. As of early March 2026, new BDTR claims have been released, which do not fall under the Sweet settlement. These claims will be evaluated under existing regulations, while litigation continues regarding the legality of various BDTR regulatory frameworks established since 2016.
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