Student loan borrowers sue over credit reports listing forgiven debt

Key Points:

• A group of student loan borrowers filed a class-action lawsuit against the U.S. Department of Education, alleging that canceled federal student loans are still being reported as active on their credit reports.
• The lawsuit, Woods v. U.S. Department of Education, claims this inaccurate reporting harms borrowers' ability to secure mortgages, rental housing, auto loans, and employment.
• The borrowers received loan forgiveness between April 2022 and January 2025 due to attending fraudulent or misleading colleges, but their debts remain inaccurately listed by credit reporting agencies Equifax, Experian, and TransUnion.
• One plaintiff, Marine veteran Jorge Cortes, had a $21,586 student loan balance forgiven, yet it still appears on his credit report, illustrating the ongoing impact of the reporting errors.
• The Project on Predatory Student Lending estimates that over 300,000 borrowers continue to have their forgiven debts incorrectly reported, and the Education Department has not yet commented on the lawsuit.