Student loan lawsuit claims Department of Education inaccurately reports loan balances – Class Action Lawsuits
A new class action lawsuit alleges the U.S. Department of Education is reporting inaccurate student loan balances when loans are transferred to a new servicer, causing financial harm to borrowers.
Plaintiff Adriana Walsh filed the class action complaint against the DOE on Feb. 18 in New York federal court, alleging violations of the Fair Credit Reporting Act (FCRA) and the Privacy Act.
The lawsuit claims the DOE fails to accurately report the balances of student loans after they are transferred from one servicer to another, resulting in borrowers appearing to owe double the actual amount.
According to the class action, the DOE contracts with servicers like Nelnet and MOHELA to manage federal student loans. When a loan is transferred from one servicer to another, the original servicer is supposed to report a $0 balance to credit reporting agencies (CRAs) like Equifax, Experian and TransUnion.
However, the DOE allegedly directs the original servicer to “suppress” the account, leading to the full pre-transfer balance being reported as open and due.
This practice results in borrowers seeing two separate accounts with outstanding balances on their credit reports, the class action lawsuit says.
The class action lawsuit alleges that the DOE has been aware of this issue but has failed to take corrective action.
The problem has reportedly drawn attention from the Consumer Financial Protection Bureau and the media, with the DOE receiving about 500 credit reporting complaints since December 2023.
Walsh claims she discovered the issue after her student loans were transferred from Nelnet to MOHELA. Despite the transfer, her credit report showed she owed more than $300,000, double the actual amount.
Walsh says she disputed the inaccurate information with Experian multiple times, but the DOE failed to correct the error.
The student loan lawsuit seeks to represent a class of borrowers who have experienced similar issues. It is seeking statutory, actual and punitive damages for the alleged violations of the FCRA and the Privacy Act.
In other student news, a federal judge has granted final approval to a $17 million settlement resolving claims that Pennsylvania State University breached its contract with students when it transitioned to remote learning during the COVID-19 pandemic.
What do you think of the claims made in this student loan class action lawsuit? Let us know in the comments.
The plaintiff is represented by Courtney L. Weiner of the Law Office of Courtney Weiner PLLC and John Soumilas of Francis Mailman Soumilas P.C.
The student loan class action lawsuit is Walsh v. United States Department of Education, Case No. 1:26-cv-01358, in the U.S. District Court for the Southern District of New York.
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Please note: Top Class Actions is not a settlement administrator or law firm. Top Class Actions is a legal news source that reports on class action lawsuits, class action settlements, drug injury lawsuits and product liability lawsuits. Top Class Actions does not process claims and we cannot advise you on the status of any class action settlement claim. You must contact the settlement administrator or your attorney for any updates regarding your claim status, claim form or questions about when payments are expected to be mailed out.
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This article was autogenerated from a news feed from CDO TIMES selected high quality news and research sources. There was no editorial review conducted beyond that by CDO TIMES staff. Need help with any of the topics in our articles? Schedule your free CDO TIMES Tech Navigator call today to stay ahead of the curve and gain insider advantages to propel your business!
Plaintiff Adriana Walsh filed the class action complaint against the DOE on Feb. 18 in New York federal court, alleging violations of the Fair Credit Reporting Act (FCRA) and the Privacy Act.
The lawsuit claims the DOE fails to accurately report the balances of student loans after they are transferred from one servicer to another, resulting in borrowers appearing to owe double the actual amount.
According to the class action, the DOE contracts with servicers like Nelnet and MOHELA to manage federal student loans. When a loan is transferred from one servicer to another, the original servicer is supposed to report a $0 balance to credit reporting agencies (CRAs) like Equifax, Experian and TransUnion.
However, the DOE allegedly directs the original servicer to “suppress” the account, leading to the full pre-transfer balance being reported as open and due.
This practice results in borrowers seeing two separate accounts with outstanding balances on their credit reports, the class action lawsuit says.
The class action lawsuit alleges that the DOE has been aware of this issue but has failed to take corrective action.
The problem has reportedly drawn attention from the Consumer Financial Protection Bureau and the media, with the DOE receiving about 500 credit reporting complaints since December 2023.
Walsh claims she discovered the issue after her student loans were transferred from Nelnet to MOHELA. Despite the transfer, her credit report showed she owed more than $300,000, double the actual amount.
Walsh says she disputed the inaccurate information with Experian multiple times, but the DOE failed to correct the error.
The student loan lawsuit seeks to represent a class of borrowers who have experienced similar issues. It is seeking statutory, actual and punitive damages for the alleged violations of the FCRA and the Privacy Act.
In other student news, a federal judge has granted final approval to a $17 million settlement resolving claims that Pennsylvania State University breached its contract with students when it transitioned to remote learning during the COVID-19 pandemic.
What do you think of the claims made in this student loan class action lawsuit? Let us know in the comments.
The plaintiff is represented by Courtney L. Weiner of the Law Office of Courtney Weiner PLLC and John Soumilas of Francis Mailman Soumilas P.C.
The student loan class action lawsuit is Walsh v. United States Department of Education, Case No. 1:26-cv-01358, in the U.S. District Court for the Southern District of New York.
⚠️ Share this video with someone who needs to hear this! #StudentLoans #LegalNews #DepartmentOfJustice #ClassAction #Consumer
Check out our list of Class Action Lawsuits and Class Action Settlements you may qualify to join!
Read About More Class Action Lawsuits & Class Action Settlements:
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Add me.
My ant loves to play with it.
heard about this on melodic death metal radio, decided to give it a try.
Your email address will not be published. By submitting your comment and contact information, you agree to receive marketing emails from Top Class Actions regarding this and/or similar lawsuits or settlements, and/or to be contacted by an attorney or law firm to discuss the details of your potential case at no charge to you if you qualify. Required fields are marked *
"*" indicates required fields
Add me.
My ant loves to play with it.
heard about this on melodic death metal radio, decided to give it a try.
Your email address will not be published. By submitting your comment and contact information, you agree to receive marketing emails from Top Class Actions regarding this and/or similar lawsuits or settlements, and/or to be contacted by an attorney or law firm to discuss the details of your potential case at no charge to you if you qualify. Required fields are marked *
Please note: Top Class Actions is not a settlement administrator or law firm. Top Class Actions is a legal news source that reports on class action lawsuits, class action settlements, drug injury lawsuits and product liability lawsuits. Top Class Actions does not process claims and we cannot advise you on the status of any class action settlement claim. You must contact the settlement administrator or your attorney for any updates regarding your claim status, claim form or questions about when payments are expected to be mailed out.
"*" indicates required fields
@2026 Top Class Actions. All Rights Reserved. Privacy Policy | Terms and Conditions | AI Assistant
source
This article was autogenerated from a news feed from CDO TIMES selected high quality news and research sources. There was no editorial review conducted beyond that by CDO TIMES staff. Need help with any of the topics in our articles? Schedule your free CDO TIMES Tech Navigator call today to stay ahead of the curve and gain insider advantages to propel your business!
