300,000 Americans Had Student Loans Cancelled but $4.6B in Debt May Still Haunt Their Credit Reports

The lawsuit seeks damages under the Fair Credit Reporting Act, but the allegations remain unproven, and no class has been certified. (Credit: This is an AI-Generated Image)

For hundreds of thousands of Americans, student loan cancellation was supposed to erase years of debt. A new lawsuit alleges that, for some, the debt never disappeared from their credit reports. Two borrowers filed a proposed class-action lawsuit against the US Department of Education on 24 September, alleging that federal loans already approved for cancellation continue to be reported as outstanding.

The Project on Predatory Student Lending, or PPSL, which represents the plaintiffs, estimates that $4.6 billion in cancelled debt affecting more than 300,000 borrowers remains on credit reports. The figure is PPSL's estimate based on publicly available data, not a finding by the court. The allegations have not been proven in court.