A group of student loan borrowers filed a class-action lawsuit against the U.S. Department of Education in federal court in Washington, D.C., alleging financial harm from inaccurate credit reporting of debts they had already had canceled.
The plaintiffs argue that despite receiving forgiveness for federal student loans between April 2022 and January 2025 due to attending fraudulent or misleading colleges, the Education Department continues reporting these debts to major credit reporting agencies including Equifax, Experian, and TransUnion. According to the borrowers, these false records negatively impact their creditworthiness and ability to obtain mortgages, rental housing, auto loans, and employment opportunities.
Jorge Cortes, one of the named plaintiffs and a Marine veteran, had his loans from ITT Technical Institute forgiven in August 2022, yet a balance of $21,586 still appeared on his credit report as of this summer. Cortes stated in a court filing that he believed the discharge would allow him to rebuild his life financially, but the inaccurate reporting created obstacles to doing so.
The lawsuit, filed by The Project on Predatory Student Lending as counsel for the plaintiffs, estimates that the Education Department continues reporting debts for more than 300,000 student loan borrowers who received forgiveness. The organization’s leadership emphasized that the borrowers fulfilled their obligations but remain harmed by false debt records affecting their financial prospects and life decisions.
The Education Department had not provided an immediate response to requests for comment regarding the allegations.
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