A proposed class-action lawsuit was filed in federal court challenging the Education Department’s continued reporting of canceled student loans to credit agencies. The case, Woods v. U.S. Department of Education, centers on borrowers whose federal student loan debts were cleared between April 2022 and January 2025 because they had attended institutions deemed fraudulent or misleading.
The plaintiffs allege that despite receiving official forgiveness, the Education Department continues to report their discharged loans to major credit reporting companies including Equifax, Experian and TransUnion. This inaccurate reporting can negatively impact borrowers’ creditworthiness and their ability to qualify for mortgages, rental housing, auto loans and employment opportunities, according to The Project on Predatory Student Lending, which is representing the borrowers.
One plaintiff, Jorge Cortes, a Marine veteran, had his ITT Technical Institute loans forgiven in August 2022, yet a $21,586 balance remained on his credit report as of this summer. Cortes stated he believed the discharge would allow him to rebuild his financial life, but his credit report reflected a different reality.
According to estimates from The Project on Predatory Student Lending, the Education Department continues reporting debts for more than 300,000 student loan borrowers despite their forgiveness. The organization’s leadership emphasized that affected borrowers have complied with all requirements but face ongoing financial consequences from inaccurate credit information. The Education Department did not provide an immediate response to requests for comment regarding the lawsuit.
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