[student loan]: Your Student Loan Was Forgiven But Still Shows as Debt — Here’s What to Do

If your loan was canceled because your school defrauded or misled you, but your credit report still lists that balance as active, you’re not misreading anything — you may be one of a large group of borrowers dealing with exactly this problem right now.

What’s going on

A lawsuit filed in the U.S. District Court for the District of Columbia, Woods v. U.S. Department of Education, alleges that the Department kept reporting discharged loan balances to Equifax, Experian, and TransUnion as active debt, in some cases years after the loans were officially forgiven. One of the people named in the suit, Marine veteran Jorge Cortes, had his ITT Technical Institute loans forgiven in August 2022 — but a $21,586 balance was still showing up on his credit report as of this summer. The suit is seeking class-action status covering more than 300,000 borrowers whose loans were discharged between April 2022 and January 2025.

What you should do right now

• Pull your credit reports from all three bureaus and check whether the discharged loan is still listed as open or active.
• Locate your discharge documentation — the letter or notice confirming your loan was forgiven due to your school’s fraud or misconduct.
• File a dispute with each bureau reporting the error (Equifax, Experian, TransUnion), attaching your discharge documentation as proof.
• Contact your loan servicer and the Department of Education to flag that the discharged balance is still being reported.
• Keep copies of everything — dispute submissions, confirmation numbers, and any responses you get.

Why this matters

According to the lawsuit, the inaccurate reporting can affect a borrower’s ability to get a mortgage, rent an apartment, get an auto loan, or even get hired — real consequences tied to a debt that’s supposed to no longer exist.

What to watch for

As of the report, the Department of Education had not responded to a request for comment, and the case is still pending. If you’re dealing with this exact situation, it may be worth checking for updates on the case as it moves through the court, since the outcome could affect how — or whether — this gets fixed for borrowers broadly.

Sources / Learn more

• Traders Union

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