Veteran Jorge Cortes and other borrowers have filed a lawsuit against the U.S. Department of Education, claiming that loans forgiven during the Biden administration continue to be reported as outstanding on their credit reports. The plaintiffs, represented by the Project on Predatory Student Lending (PPSL), say the erroneous listings are damaging their credit scores and limiting their ability to secure housing and other loans.
Background of the dispute
The borrowers’ loans were cancelled through a “group discharge” program that the Education Department announced in August 2022. Under that program, eligible borrowers received automatic relief without needing to submit individual applications. Cortes, a Marine Corps veteran, took out federal loans to attend ITT Technical Institute, a for‑profit school that closed in 2016 amid allegations of deceptive recruiting practices.
Although the Department of Education told eligible borrowers that the relief was automatic and required no further action, Cortes discovered in August 2026 that his credit report still showed a balance of $21,586. He filed disputes with the three major credit reporting agencies. The loan servicer responded that the information it had provided was accurate and cited the Fair Credit Reporting Act, stating it could not remove information it deemed correct.
Legal claims and alleged impact
In a press release, PPSL President and Executive Director Eileen Connor said, “The government cannot tell borrowers their loans are cancelled, report those same loans as debts they still owe, and then ignore them when they try to correct the record.” The lawsuit alleges that the false debt listings are harming borrowers’ ability to rent homes, obtain new credit, and plan for their futures.
PPSL estimates that more than 300,000 borrowers with a total of $4.6 billion in cancelled debt may still be facing similar credit‑reporting errors. The plaintiffs are seeking class‑action status, arguing that the Department of Education’s reporting practices violate federal consumer‑protection laws.
Response and broader context
Hearst Television has reached out to the Education Department for comment. While the lawsuit focuses on a federal program implemented during the previous administration, it underscores ongoing concerns about the accuracy of credit reporting and the need for government accountability.
Consumer advocates and policymakers have long warned that inaccurate credit information can have lasting repercussions for individuals and families. The current administration has emphasized the importance of transparent and fair lending practices, and this case may prompt a review of how loan forgiveness is reflected in credit databases.
What borrowers can do
Borrowers who believe they have been incorrectly reported as owing forgiven loans are encouraged to dispute the information directly with the credit bureaus and to keep documentation of any loan‑cancellation notices. Legal assistance from organizations like PPSL can help navigate the complex process of correcting credit records.
Original reporting: WPBF (Treasure Coast / Hearst) — read the source article.
