A group of federal student loan borrowers filed a class-action lawsuit against the U.S. Department of Education on Thursday, contending that their forgiven debts continue to be reported to credit agencies as active obligations despite having been canceled years earlier.
The plaintiffs claim that the Education Department maintains these debts on their credit reports with Equifax, Experian, and TransUnion, even though the loans were cleared during the Biden administration between April 2022 and January 2025. According to the borrowers, the inaccurate reporting has created tangible financial consequences, limiting their access to mortgages, rental housing, auto loans, and employment opportunities. The lawsuit, Woods v. U.S. Department of Education, was filed in U.S. District Court for the District of Columbia.
One named plaintiff, Marine veteran Jorge Cortes, had his student loans from ITT Technical Institute forgiven in August 2022, yet a balance of $21,586 remained on his credit report as of summer. Cortes stated that despite being told his debts were discharged, the inaccurate credit reporting has prevented him from moving forward. The Project on Predatory Student Lending, representing the plaintiffs, estimates that the Education Department is still reporting debts for more than 300,000 borrowers whose loans should have been canceled.
The lawsuit highlights a significant gap between loan forgiveness actions and credit reporting practices, raising questions about how canceled debts are handled in the verification process with major credit agencies. The Department of Education did not immediately provide comment on the allegations.
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