On March 23, the U.S. District Court for the Western District of Kentucky granted motions by two student loan furnishers to dismiss claims brought by a borrower alleging a FCRA violation. Specifically, the borrower claimed that the furnishers violated the FCRA by reporting inaccurate student loan balances on her credit reports after the Department of Education (ED) determined her federal student loan debt was eligible for discharge through the “Borrower Defense to Repayment” program in January 2025. The borrower claimed that, despite the eligibility determination, the furnishers continued to report outstanding balances exceeding $219,000 in violation of Section 1681s-2(b) of the FCRA, which requires furnishers to investigate disputed credit information upon receiving notice from a consumer reporting agency. The court’s opinion noted that the borrower submitted disputes to consumer reporting agencies in May and June 2025, as well as a direct dispute to the first furnisher; however, all of these disputes predated the actual discharge of her loans on June 15, 2025.

The court held that the borrower’s claims failed on multiple grounds. First, it found that eligibility for discharge did not equate to actual discharge, which did not occur until months later on June 15, 2025. Therefore, reporting an outstanding balance before that date was neither inaccurate nor misleading, especially given ED’s own letter stated the borrower’s loans would “remain in forbearance” until she received relief. Additionally, the court found that the borrower failed to allege that any consumer reporting agency notified the first furnisher of her dispute — a prerequisite for triggering a furnisher’s duty to investigate under Section 1681s-2(b) — and that direct disputes sent to the furnisher were insufficient to trigger that obligation. With respect to post-discharge reporting, the court noted that the borrower did not allege she filed a new dispute with a consumer reporting agency after the June 2025 discharge, despite July 2025 credit reports still reflecting a balance. Finally, as to the second furnisher, the court found the complaint mentioned it only in the case caption, that the plaintiff made no substantive allegations of misconduct by the furnisher, and that the borrower’s own exhibits showed the furnisher reported a $0 balance after discharge. The court dismissed the claims without prejudice and ordered that any amended complaint be filed by May 23.