Student Loan Borrowers Sue Trump Administration Over Credit Report Issues

Lawsuit Filed Over Student Loan Credit Reporting

A group of student loan borrowers has initiated a lawsuit against the Trump administration, asserting that their federally canceled student loans continue to appear as active on their credit reports. This misreporting is hindering their ability to secure mortgages, find rental housing, and even obtain employment. The case, known as Woods v. U.S. Department of Education, claims that the borrowers have suffered unexpected financial damages despite the federal student loans being forgiven due to the fraudulent nature of the colleges they attended.

Background of the Lawsuit

The lawsuit was filed in the U.S. District Court for the District of Columbia, where borrowers argue that the U.S. Department of Education (DOE) erroneously reports their discharged debts to credit bureaus such as Equifax, Experian, and TransUnion. According to The Project on Predatory Student Lending, which is representing the plaintiffs, the inaccurate credit reporting compromises the financial stability of these borrowers.

Eileen Connor, president and executive director of the Project on Predatory Student Lending, expressed concern, stating, "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."

Details of the Case

The class-action lawsuit includes borrowers whose federal student loan debts were cancelled during the Biden administration, specifically between April 2022 and January 2025. These cancellations were implemented for borrowers who attended colleges found to be fraudulent or misleading. Despite receiving relief from their debts, the plaintiffs claim that the Department of Education continues to report their debts inaccurately.

One of the plaintiffs, Jorge Cortes, a Marine veteran, had his student loans from ITT Technical Institute forgiven in August 2022. However, as of summer 2026, a balance of $21,586 remains on his credit report. Cortes lamented this situation, stating, "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."

Ongoing Reporting Concerns

According to estimates by The Project on Predatory Student Lending, more than 300,000 borrowers still have their debts reported by the Department of Education, posing a significant hurdle in their post-graduation lives. The Department has yet to release a comment regarding the ongoing situation and the lawsuit.

This legal action underscores the challenges faced by many borrowers who believed they had been granted relief only to find that erroneous reporting continues to affect their creditworthiness and opportunities for financial growth.