Borrowers Sue Education Department Over Canceled Loans Still Listed on Credit Reports
publishers 7articles 7first reported 24 Sep, 16:49 UTCdeveloping since 24 Sep · 6 editions
A group of student loan borrowers sued the U.S. Department of Education on Thursday, alleging that federal loans canceled years ago remain listed as active debts on their credit reports.
The proposed class action, *Woods v. U.S. Department of Education*, was filed in U.S. District Court for the District of Columbia. It covers borrowers whose loans were discharged between April 2022 and January 2025 because they attended colleges found to have defrauded or misled students.
The lawsuit claims the department continues reporting about $4.6 billion in canceled debt held by more than 300,000 borrowers to Equifax, Experian and TransUnion. The plaintiffs say the allegedly inaccurate records have harmed their ability to secure mortgages, rental housing, auto loans and employment.
One plaintiff, Marine veteran Jorge Cortes, had loans from ITT Technical Institute discharged in August 2022, according to the filing. A balance of $21,586 was still shown on his credit report this summer. Another borrower reportedly has $72,000 in canceled loans remaining on her report.
The Project on Predatory Student Lending, which represents the plaintiffs, said the continued reporting is affecting borrowers’ finances and housing options. The Education Department did not immediately respond to CNBC’s request for comment.
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