Education Law

Dept. of Ed's edits of forms call for judicial review in loan forgiveness case, ABA says in filing

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Department of Education

The U.S. Department of Education recently revised two online forms for its Public Service Loan Forgiveness program to say that it applies only to jobs with organizations whose “primary purpose” is either public service or public education. The ABA says in a court filing that this is proof that the change was more than informal and should have been handled through administrative law.

The suit in U.S. District Court for the District of Columbia was brought by the association and four lawyers who were dropped from the program after having been approved and working under the PSLF program for years.

The upshot is that lawyers willing to do public interest work in nonprofits would no longer be eligible for the loan forgiveness if they worked at the ABA—which has hundreds of programs dedicated to public service and education, in addition to its other work for improving the administration of justice—or at other organizations doing similar work, such as the Vietnam Veterans of America and the American Immigration Lawyers Association.

The PSLF program offers forgiveness of the remaining balance of education loans after the lawyers have worked 10 years in certain nonprofit, public service jobs, and if they have made 120 monthly payments on time. The program was launched in October 2007, and the first forgiveness of loan balances is expected in October.

The Education Department had mentioned “primary purpose” in the past—first in letters to those whose participation in the program was being revoked, then in a response last fall to ABA Executive Director Jack Rives, who questioned the revocations—but argued in a July motion for summary judgment (PDF) that its use of the term was “individual, informal, interim, nonprecedential adjudications.”

If the agency were changing its interpretation of its 2008 final rule on the statute, that would open the revocations of program participants to judicial review—a key issue in the litigation. The ABA argues in its lawsuit (PDF) that the agency failed to follow statutory procedures for modifying the regulation in violation of the Administrative Procedure Act and improperly applied the changes retroactively.

A spokesman in the Education Department’s press office said Wednesday that the agency does not comment on pending litigation.

In mid-August, the Education Department changed the employment certification form (PDF) available on its website, adding the “primary purpose” provision as well as the one for “school or school-like” situations for public education. Then last week, according to a lawyer at the Ropes & Gray law firm office in Washington, D.C., the agency made the same change to the application for forgiveness form (PDF).

“There clearly is a kind of common theme of inserting limiting definitions as they go along and saying it’s not policy,” says John Dey, a Ropes & Gray lawyer on a team at the firm representing the ABA and the individual plaintiffs pro bono, which filed the suit.

In its August response (PDF) to the Education Department’s motion for summary judgment, the ABA introduced newly discovered documents, including emails between the Education Department and FedLoan Servicing, which handles the loans. In one string, a FedLoan employee wrote to an employee at the agency, noting that the Education Department’s letters to three organizations, one of them the Vietnam Veterans of America, “referenced that the organization’s ‘primary purpose’ has to be to provide one of the listed qualifying services.” The FedLoan employee then noted being “concerned as to whether or not this guidance is directly conflicting with how we have been evaluating certain organizations,” and mentioned one example in public health services.

The Education Department employee responded that the agency believes that now with the “primary purpose” requirement, the organization doesn’t qualify and that he “think[s] that we need to do a retraction in this case.” He then asked the FedLoan employee to “comb through those organizations that we’ve approved under ‘public health’ and provide [the Department] a list, like you’ve done before for public education and public interest legal services.” (Text was italicized in the ABA brief.)

The PSLF’s authorizing statute, the College Cost Reduction and Access Act of 2007, provides partial loan forgiveness for those who work for 10 years in a “public service job.” It did not require that the employer’s “primary purpose” be public service. In the agency’s final rule promulgated in October 2008, it defined a “public service organization” as a nonprofit whose “public service” activities “are funded in whole or in part by a local, state, federal or tribal government.”

In May, the ABA filed for summary judgment in the case, arguing that the agency should be ordered to cease issuing retroactive denials to program participants and restore those who have been dropped.

The suit alleges that, besides violating the Administrative Procedure Act, the Education Department violated the due rights of four named plaintiffs, including two who formerly worked at the ABA, one from the VVA and one from the AILA.

The Education Department in its summary judgment motion said: “Neither the Department’s notices nor its letters to individual plaintiffs and the ABA delineate a generally applicable policy or purport to speak to a broad class of individuals.” And it argues that its “determination that a particular organization is not a qualifying employer cannot be read to have any broader applicability, particularly here, where the notices invite the recipient to apply with additional evidence to support a favorable decision.” ( reported on that filing at the time.)

But those letters to plaintiffs and Rives, and likely others, raise questions about how far the “interpretation” has gotten from the original statute.

For example, in response to ABA Executive Director Rives in December 2016, the agency said it would update its website with more detail on criteria for eligible employers.

Keying on that, in its reply in August, the ABA said, “In other words, the department acknowledged that it had failed to inform the public of the new standard it was applying in assessing PSLF eligibility of all private organization employers, not just the ABA.”

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