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Their Student Debt Was Forgiven. They Say It's Still Appearing on Credit Reports
The suit says the department is wrongly reporting 300,000 borrowers and $4.6 billion in canceled debt as outstanding, hurting credit scores and access to loans.
- On Thursday, a group of student loan borrowers sued the Department of Education, alleging the agency continues reporting canceled debts as active. The lawsuit, filed in the U.S. District Court for the District of Columbia, claims these inaccurate reports harm borrowers' financial standing.
- PPSL estimates the department wrongfully reports over 300,000 borrowers for $4.6 billion in canceled debt. This pertains to loans forgiven between April 2022 and January 2025 after students attended "predatory for-profit" schools including Ashford University and ITT Technical Institute.
- Plaintiff and Marine veteran Jorge Cortes, whose ITT loans were canceled in August 2022, discovered a $21,586 balance remained on his report this summer. Fellow plaintiff Mandy Woods borrowed $65,000 to attend Ashford University and faces similar credit damage.
- "These borrowers have done everything asked of them," said PPSL President Eileen Connor, noting false debt shapes where they can live and borrow. Borrowers claim the department promised relief was automatic, yet they now face growing debt on their credit files.
- The lawsuit argues the department violates the Fair Credit Reporting Act by failing to update records with Equifax, Experian, and TransUnion. Loan servicers have insisted they cannot remove information until the FCRA requires them to do so.
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BizToc300,000 student-loan borrowers got their debt wiped out — but their credit is still taking a hit, a new lawsuit says
A lawsuit filed against the Department of Education argued that student-loan borrowers' forgiven debt is being improperly reported to credit bureaus.
·New York, United States
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Millions Face Credit Nightmare: The Hidden Cost of Student Loan Forgiveness
Imagine finally getting that life-changing news: your student loans, those heavy shackles that have weighed you down for years, are forgiven. A clean slate, a fresh start. You breathe a sigh of relief, perhaps even shed a tear of joy. But then, months later, you check your credit report, only to find a brutal surprise. That “forgiven” debt is still there, active, dragging down your score, and making it nearly impossible to get approved for a mor…
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