Key facts
- A lawsuit alleges the Department of Education is reporting forgiven student loan balances to credit bureaus.
- The Project on Predatory Student Lending filed the lawsuit on Thursday.
- The suit claims 300,000 borrowers have had $4.6 billion in canceled debt wrongly reported.
- The affected borrowers had their loans wiped out via the borrower defense to repayment program.
- The issue pertains to borrowers who received relief between April 2022 and January 2025.
- One plaintiff, Mandy Woods, has a credit report showing over $71,000 owed despite her loans being discharged.
A new lawsuit filed by the Project on Predatory Student Lending (PPSL) alleges that the U.S. Department of Education is continuing to report forgiven student loan balances to credit bureaus, potentially violating the Fair Credit Reporting Act. The lawsuit, filed on Thursday, claims that approximately 300,000 borrowers have had $4.6 billion in canceled debt wrongly reported as outstanding. This practice, according to the suit, is negatively impacting the credit scores of borrowers whose loans were discharged through the borrower defense to repayment program after being defrauded by for-profit schools like Ashford University and ITT Technical Institute. The issue specifically concerns borrowers who received this relief between April 2022 and January 2025. PPSL stated that affected borrowers have faced difficulties in rectifying the situation and are concerned about potential collection actions like wage garnishment or tax refund offsets for debts they were told were legally unenforceable. One plaintiff, Mandy Woods, who attended Ashford University, reported that her credit report still shows over $71,000 in debt despite her loans being discharged.