Borrowers and the Project on Predatory Student Lending allege in a proposed class action that the Education Department reported $4.6 billion in canceled student debt as outstanding to credit bureaus. The group estimates over 300,000 borrowers may be affected.
The case concerns group discharges from April 2022 through January 2025, after schools were found to have engaged in fraud or misconduct. The suit says some loans still showed balances due and accrued interest after borrowers challenged the reports; named plaintiffs say their disputes were dismissed. The Education Department did not immediately respond to a request for comment.
A discharged loan should show a $0 balance in the servicer account and appear as closed with no balance on a credit report. Borrowers can request a free report each week from Equifax, Experian and TransUnion through AnnualCreditReport.com. Federal loans are reported monthly, so updates may take time. Borrowers can dispute an incorrect balance that remains long after their servicer confirms closure.
