U.S. Secretary of Education Linda McMahon testifies before a Senate Appropriations hearing on U.S. President Donald Trump’s budget request for the Department of Education, on Capitol Hill in Washington, D.C., U.S., June 3, 2025. REUTERS/Annabelle Gordon
Annabelle Gordon | Reuters
A group of student loan borrowers sued the Trump administration on Thursday, alleging they suffered unexpected financial damages despite getting their debts forgiven years ago.
The borrowers said in their lawsuit, Woods v. U.S. Department of Education, filed in the U.S. District Court for the District of Columbia, that the department continues to report their canceled federal student loans to credit reporting companies as active. The inaccurate credit reports can affect borrowers’ ability to obtain mortgages, rental housing, auto loans and employment, according to The Project on Predatory Student Lending, which is serving as counsel for the plaintiffs.
“These borrowers have done everything asked of them, but this false debt is still shaping where they can live, what they can borrow, and what their futures look like,” said Eileen Connor, the president and executive director of PPSL.
The proposed class-action lawsuit involves borrowers whose federal student loan debts were cleared during the Biden administration between April 2022 and January 2025 because they attended a fraudulent or misleading college. The borrowers allege that, despite that relief, the Education Department still reports their debts to the major credit reporting companies, including Equifax, Experian and TransUnion.
One of the plaintiffs in the case, Jorge Cortes, is a Marine veteran who had his student loans from the ITT Technical Institute forgiven in August 2022, according to the court filing. Still, a $21,586 student loan balance remained on his credit report as of this summer.
“When the Department of Education told me these loans were discharged, I thought I could finally put them behind me and start rebuilding my life, but my credit report tells a different story,” Cortes said in a statement.
The Education Department is still reporting the debts of more than 300,000 student loan borrowers, according to an estimate by PPSL.
The Education Department did not immediately respond to a request for comment.
