The lawsuit, Woods v. U.S. Department of Education, was initiated by borrowers who had their federal student loans forgiven due to attending fraudulent colleges. Despite the forgiveness, the Education Department continues to report these debts to credit bureaus, affecting borrowers' ability to secure mortgages, rental housing, and employment.
Eileen Connor, president of The Project on Predatory Student Lending, emphasized that these inaccuracies are hindering borrowers' lives. One plaintiff, Marine veteran Jorge Cortes, reported that a $21,586 balance remained on his credit report even after his loans were discharged in August 2022.
The Education Department is estimated to still report debts for over 300,000 borrowers, raising concerns about the accuracy of credit reporting and the potential long-term financial consequences for affected individuals. The Education Department has not yet commented on the lawsuit