A proposed class-action lawsuit was filed in U.S. District Court for the District of Columbia against the Trump administration’s Education Department, with borrowers contending that canceled federal student loans continue to be reported to credit agencies as active accounts despite having been discharged.
The plaintiffs assert that these inaccurate credit reports restrict their access to mortgages, rental housing, automobile loans, and employment opportunities. According to The Project on Predatory Student Lending, which is representing the plaintiffs, the Education Department continues to report debts to major credit reporting companies including Equifax, Experian, and TransUnion despite having forgiven the loans.
The class-action suit, titled Woods v. U.S. Department of Education, involves borrowers whose federal student loan debts were cleared during the Biden administration between April 2022 and January 2025 due to attending institutions involved in fraud or misleading practices. One named plaintiff, Jorge Cortes, a Marine veteran whose ITT Technical Institute loans were forgiven in August 2022, reported that a balance of $21,586 remained on his credit report as of this summer.
According to estimates from The Project on Predatory Student Lending, the Education Department continues to report debts for more than 300,000 borrowers. Officials at the Education Department did not provide an immediate response to requests for comment regarding the allegations.
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