A onetime senior official who served under President Donald Trump has initiated significant legal proceedings against the very administration in which he once served, centering on its management of student-loan borrowers who fall behind on their repayment obligations. At the end of October, A. Wayne Johnson — formerly responsible for supervising the vast federal student-loan portfolio during the first Trump term — began a sweeping class-action lawsuit. Partnering with the Georgia-based law firm Cooper, Barton, & Cooper, Johnson filed the litigation not only against the U.S. Department of Education but also against three major credit-reporting agencies: Equifax, Experian, and TransUnion. This legal action represents a bold challenge to the government’s handling of borrower defaults and the financial reporting practices that Johnson alleges have unfairly penalized individuals striving to manage their educational debt.
The lawsuit was brought forward on behalf of four specific borrowers who assert that they were inaccurately recorded as having defaulted on their loans. Each of these plaintiffs contends that these erroneous reports profoundly damaged their financial reputations and that attempts to secure assistance or correction from the Department of Education proved futile. However, the reach of the suit is not limited to these four individuals; it extends to a broader class of borrowers who may have experienced similar injustices. The complaint accuses both the Department of Education and the credit reporting firms of engaging in what it describes as “willful violations” of the Fair Credit Reporting Act. These violations, the suit claims, have resulted in “millions of borrowers” unjustly being labeled as seriously delinquent or even in default. Such mischaracterizations, according to the filing, have caused devastating consequences — destroying financial stability, impeding credit access, and effectively stripping borrowers of economic mobility while extracting billions of dollars through unfairly applied penalties and mistaken default designations.
Central to Johnson’s argument is the assertion that several systemic deficiencies within the federal student-loan infrastructure have precipitated these wrongful defaults. The complaint highlights a decline in loan-servicer capacity, large-scale layoffs within the Department of Education, and chronic underfunding as key drivers of the problem. Together, these factors have allegedly contributed to widespread administrative breakdowns, leading to the improper classification of borrowers’ repayment statuses. Johnson, addressing the issue further in an online video statement, emphasized that the relief sought through this class action is both financial and corrective. Specifically, he is advocating for each class member to receive $100,000 in compensation, as well as the complete removal of all negative or inaccurate credit marks from their credit reports — measures he argues are essential for restoring the financial dignity of affected individuals.
The response from the entities named in the lawsuit has been predictably defensive. A spokesperson for the Department of Education dismissed the case in sharply critical terms, labeling it “an embittered attempt by ideologues” to interfere with and reshape the administration’s existing systems for collecting student loan debt. In contrast, an Equifax spokesperson stated that the company maintains a policy of not commenting on ongoing litigation. Experian and TransUnion, the two other credit-reporting firms implicated, did not provide any response to Business Insider’s requests for comment, maintaining public silence as the case moves forward.
This legal challenge unfolds amid a broader shift in federal student-loan policy. After a five-year hiatus, the Department of Education resumed collections on defaulted student loans in May, marking a return to aggressive repayment enforcement. In an April opinion piece, Linda McMahon, who served as Trump’s education secretary, sought to clarify the intent behind this policy restart. She asserted that the decision to resume collections was not motivated by cruelty or indifference toward struggling borrowers, but rather by a belief in fiscal responsibility and fairness to taxpayers. “Borrowing money and failing to repay it isn’t a victimless offense,” McMahon wrote, underscoring her view that unpaid debt ultimately burdens others within the financial system. She added, “Debt doesn’t disappear; it simply transfers its weight onto others,” articulating a moral argument for sustaining the integrity of the loan repayment process.
Recent data underscores the scale of the issue at hand. Approximately five million borrowers are currently in default on their federal student loans, and the New York Federal Reserve’s quarterly report on household debt and credit indicates that, as of the second quarter of 2025, roughly 10.2% of total student loan balances were in serious delinquency. This condition represents a state of severe financial distress in which borrowers are significantly behind on their payments and are nearing formal default. Once a borrower has missed 270 days of required payments, federal regulations classify the loan as defaulted, triggering a series of harsh consequences such as wage garnishment, loss of eligibility for additional federal aid, and long-term credit damage.
For borrowers who have been reported as seriously delinquent or declared in default since January 1, 2025 — and who believe they may have been wrongfully affected — the class action initiated by Johnson offers a potential avenue for redress. Those interested in joining the case can submit their information through the appropriate channels, potentially becoming part of a collective effort that seeks both restitution and systemic change. As the lawsuit unfolds, it could become a defining test of accountability within the nation’s sprawling and often-contested student loan system.
Sourse: https://www.businessinsider.com/trump-student-loan-official-lawsuit-unfair-credit-reporting-debt-collections-2025-11
