Adriana Walsh Student Loan Lawsuit: What Borrowers Need to Know

A proposed class action filed in February 2026 alleges the U.S. Department of Education has been doubling student loan balances on credit reports during servicer transfers — and that the department knew about the problem for years before being sued.

• The case. Walsh v. United States Department of Education (Case No. 1:26-cv-01358, S.D.N.Y.) claims the Education Department directs servicers to “suppress” old accounts instead of closing them, leaving both the old and new balances visible.

• The legal theories. The complaint asserts two claims — violations of the Fair Credit Reporting Act (FCRA) and the Privacy Act of 1974 — both made possible by a unanimous 2024 Supreme Court ruling allowing borrowers to sue federal agencies for credit reporting errors.

• The scale. The most documented episode — the 2023 Nelnet-to-MOHELA transfer — produced at least 1.4 million duplicate records and over 100,000 incorrect credit scores. The lawsuit covers all Education Department-directed servicer transfers that used the same suppression approach.

• What to watch. No class has been certified yet. Borrowers who experienced double-reporting after a servicer transfer may be included automatically if the court certifies a class.

Adriana Walsh, a New York borrower, filed suit against the U.S. Department of Education on February 18, 2026, after discovering her $150,000 student loan balance appeared as $300,000 on her credit report. The balance doubled after her loans transferred from Nelnet to MOHELA.

Walsh says she disputed the inaccurate information with Experian multiple times, but the Education Department failed to investigate or correct the error. The complaint also alleges the department has received approximately 500 credit reporting complaints since December 2023 and still has no permanent fix.

The lawsuit names Equifax, Experian, TransUnion, Nelnet, and MOHELA as defendants, along with the Education Department. It seeks statutory, actual, and punitive damages on behalf of a proposed class of borrowers who experienced double reporting following department-directed servicer transfers.

Walsh is represented by Courtney L. Weiner of the Law Office of Courtney Weiner PLLC and John Soumilas of Francis Mailman Soumilas, P.C. — a firm with extensive FCRA litigation experience.

Duplicate student loan balances have appeared on borrowers’ credit reports after servicer transfers since at least 2023 — triggering a Washington Post investigation, a congressional inquiry, and hundreds of complaints to the Education Department, none of which produced a permanent fix.

The Nelnet-to-MOHELA Transfer

The most documented episode was the mass transfer of student loan accounts from Nelnet to MOHELA in 2023. Lawmakers later described the result as “millions of consumer credit reporting errors.” At least 1.4 million duplicate student loan records appeared on borrowers’ credit reports, and the credit reporting agencies identified over 100,000 cases where errors produced incorrect credit scores, with thousands of borrowers experiencing drops of more than 20 points.

Nelnet’s own spokesperson attributed the problem to an “ED-directed change in servicing requirements” that were “entirely outside servicers’ control.” That matches the Walsh complaint’s core theory: the department’s policy, not servicer error, caused the reporting failure.

Media and Congressional Scrutiny

A Washington Post investigation in May 2024 profiled borrowers whose balances had doubled after the Nelnet-to-MOHELA transfer. The department acknowledged the complaints but had not verified how many related to duplication.

In August 2024, Senators Elizabeth Warren and Ron Wyden launched a congressional investigation, sending letters to Nelnet, MOHELA, and the three credit bureaus demanding answers. A December 2024 follow-up letter urged the CFPB and the Education Department to use their “supervisory and enforcement authority to ensure that the appropriate parties are held accountable.”

A Regulatory Vacuum

The Walsh lawsuit was filed in February 2026 — at a time when the federal agencies that would normally address this problem had largely stopped. A GAO report found that Federal Student Aid stopped reviewing servicer accuracy in February 2025 and has not resumed. The CFPB, which received a record 18,400 federal student loan complaints in fiscal year 2024, has deprioritized student loan enforcement under the current administration. ProPublica reported in March 2026 that more than 2.7 million credit reporting complaints submitted to the CFPB since January 2025 remain unresolved.

The Walsh lawsuit is, in practice, a private enforcement action filling the space left by that regulatory withdrawal.

When the Education Department transfers loans from one servicer to another, standard credit reporting practice calls for the old servicer to report a $0 balance and mark the account as “closed — transferred.” The new servicer then opens a fresh tradeline with the correct balance.

The Walsh complaint alleges the department does not follow that practice. Instead, the department directs the original servicer to “suppress” the account — a technical status that hides the tradeline from view but does not close it or zero out the balance. If the suppression fails or credit bureaus continue to pull the old data, the full pre-transfer balance remains active alongside the new servicer’s balance.

The result: a borrower with $150,000 in student loans appears to owe $300,000.

The complaint frames suppression as a deliberate Education Department policy directive — not a processing error at the servicer level. No public reporting has traced the directive to a specific policy document or guidance memo.

The Supreme Court’s unanimous February 2024 decision in Department of Agriculture v. Kirtz is the reason this lawsuit exists. Before that ruling, the Education Department could have argued sovereign immunity — the doctrine that federal agencies cannot be sued for money damages unless Congress has specifically waived it.

Kirtz held that the FCRA’s definition of “person” — which includes “any government or governmental subdivision or agency” — clearly waives that immunity. Federal agencies can now be sued for FCRA damages just like private companies.

The Walsh complaint builds on that foundation with two legal theories:

• FCRA violations. The Education Department, as a furnisher of credit information, allegedly failed to follow reasonable procedures to ensure accuracy (§ 1681e(b)) and failed to investigate Walsh’s dispute after notification by a credit bureau (§ 1681s-2(b)) — the same provision at issue in Kirtz.

• Privacy Act violations. The Privacy Act of 1974 requires federal agencies to maintain records with accuracy sufficient to ensure fairness. Walsh argues that the department’s suppression directive led it to maintain and disseminate inflated loan-balance records. This theory applies only to federal agencies — it cannot be used against private servicers — and positions the department’s internal policy as the direct cause of harm.

The Privacy Act claim does not depend on how the servicers reported the data. It targets the Education Department’s own recordkeeping directive.

Walsh v. Education Department is part of a broader wave of credit reporting litigation against student loan servicers and federal agencies.

Walsh v. Nelnet (1:2024cv04325, S.D.N.Y.) is an earlier lawsuit filed by the same plaintiff against Nelnet in 2024. A motion to dismiss was denied in July 2025, and the case was transferred to the District of New Jersey. The parallel cases suggest Walsh’s legal team is pursuing a theory that both the servicer and the agency bear responsibility — the servicer for how it reported the data, and the Education Department for the policy directive that caused the reporting failure.

Both cases matter because they establish that FCRA claims against student loan servicers for transfer-related double-reporting can survive early legal challenges. The Nelnet case cleared that hurdle before the Education Department case was even filed.

Two other active cases involve related credit reporting claims:

• Stevens v. Nelnet Servicing, LLC (3:24-cv-00280, N.D. W.Va., filed June 2024) — a class action alleging Nelnet miscalculated monthly repayment amounts and misreported inflated figures to credit bureaus.

• Georgia class action (filed January 2026) — a separate class action alleging the Education Department and credit reporting agencies violated the FCRA by reporting millions of borrowers as delinquent while failing to enroll them in repayment plans.

Borrowers have nothing to sign up for yet — no class has been certified, and class actions against the federal government typically take years to resolve.

If the court certifies a class, borrowers who experienced double reporting after department-directed servicer transfers would likely be automatically included — you would receive notice and have the option to opt out.

Watch for updates on class action tracking sites like Top Class Actions or on this site.

If You Have Documented Harm

If a doubled balance has caused you financial harm — a denied mortgage, a higher interest rate, a rejected rental application — you may have an individual FCRA claim separate from the class action. The Kirtz ruling means federal agencies are no longer shielded from these suits, and FCRA remedies include actual damages, punitive damages, and attorney fees. An FCRA attorney can evaluate whether your situation supports an individual case.