Overview
Case Number: 1:26-cv-03335
Practice Area: Consumer Protection
Case Status: Pending
Court: U.S. District Court for the District of Columbia
Berger Montague serves as co-counsel with the Project on Predatory Student Lending for federal student loan borrowers in this consumer protection class action lawsuit filed against the U.S. Department of Education, which continues to report billions of dollars in canceled student loan debt as owed on borrowers’ credit reports.
Filed on September 24, 2026, in the U.S. District Court for the District of Columbia, the lawsuit alleges that the Department violated the Fair Credit Reporting Act (FCRA). Between April 2022 and January 2025, the Department canceled all federal student loans tied to ten for-profit schools, including Corinthian Colleges, ITT Technical Institute, the Art Institutes, and Ashford University, after finding widespread fraud and misconduct. Borrowers were told they owed nothing and did not need to take any action. Yet the Department continues to report many of these cancelled loans to Equifax, Experian, and TransUnion as active debts with growing balances—and has failed to correct the errors even after borrowers formally disputed them. An estimated $4.6 billion in canceled debt is still being reported for more than 300,000 borrowers.
Plaintiff Mandy Woods, who attended Ashford University, had her loans canceled in January 2025, yet her credit reports showed a balance of $71,901 as of August 2026—roughly $2,000 more than when she first disputed it. Plaintiff Jorge Cortes, a U.S. Marine Corps veteran who attended ITT Technical Institute, still had $21,586 in canceled debt on his credit reports four years after the Department canceled his loans. In 2024, the U.S. Supreme Court unanimously held that federal agencies can be held liable for damages under the FCRA, just like private creditors.
Read more about this case:
- Student loan borrowers sue Trump administration over forgiven debts on credit reports, CNBC (September 24, 2026). Read more here.
- Student Loan Borrowers Allege Canceled Debt Is Still Trailing Them, The Wall Street Journal (September 24, 2026). Read more here.
- The government canceled her student loans due to a scam — but $72,000 is still on her credit report, MarketWatch (September 24, 2026). Read more here.
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Woods v. U.S. Department of Education FAQs
Which schools are covered by the Department’s group discharge decisions?
Marinello Schools of Beauty (enrolled 2009 through February 2016); Corinthian Colleges (1995 through April 2015); ITT Technical Institute (January 1, 2005, through September 2016); Westwood College (January 1, 2002, through November 17, 2015); CollegeAmerica’s Colorado locations (January 1, 2006, through July 1, 2020); The Art Institutes (January 1, 2004, through October 16, 2017); schools owned by the Center for Excellence in Higher Education, including CollegeAmerica (non-Colorado locations), Stevens-Henager College, Independence University, and California College San Diego (January 1, 2006, through August 1, 2021); Drake College of Business (January 1, 2008, through July 31, 2015); Lincoln Technical Institute’s Criminal Justice Program in Lowell, Massachusetts (2010 through 2012) and Somerville, Massachusetts (2010 through 2013); and Ashford University (March 1, 2009, through April 30, 2020).
My loans were cancelled. Why do they still appear on my credit report?
According to the complaint, the Department has not finished processing the discharges for hundreds of thousands of eligible borrowers. In the meantime, it continues to report those cancelled loans to the credit bureaus as “Deferred,” with a balance due, a future payment date, and interest accruing each month. This can raise the cost of borrowing and affect decisions about housing, employment, and credit.
What happens after I submit my information?
Your information will be reviewed by our legal team. If you appear to be eligible, a member of our team will contact you to discuss next steps, explain the case in more detail, and answer any questions you may have.
Do I have to pay to speak with an attorney?
No. An initial consultation is free of charge. If you qualify to participate in a case, you will not be required to pay any upfront legal fees
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