In answer to ABA lawsuit, Education Department says it never changed loan forgiveness rules
In response to a lawsuit from the American Bar Association, the U.S. Department of Education appears to be arguing that it has never issued any approval to participate in its Public Service Loan Forgiveness program.
The ABA sued (PDF) the DOE on Dec. 20, after the PSLF program began disqualifying ABA employees and other public interest lawyers who had previously been approved for participation in the program.
But in its answer (PDF) filed March 23, the DOE appears to argue that it did not change the terms of the PSLF program, because approvals issued by its loan servicer were tentative. Therefore, it says, there were never any approvals.
The PSLF program, authorized by federal law in 2007, permits certain people who work in nonprofit and public service jobs to have their student loans forgiven. Participants must work at a 501(c)(3) nonprofit or provide certain services to qualify, including “public education.” After 10 years in those jobs and 120 on-time payments on their student loans, participants can have the balance of their loans forgiven. The first loan forgiveness could be as early as October of this year.
Participants submit an Employment Certification Form, permitting borrowers to confirm that they qualify for the program. Public interest employees have started receiving denials of ECFs, the ABA’s lawsuit says, even when they previously had been accepted. As a result, the ABA has lost employees and prospective employees concerned about their ability to pay off high student loan debt without the program.
Name plaintiff Geoffrey Burkhart, who at the relevant time worked for the ABA’s Standing Committee on Legal Aid and Indigent Defendants, alleged in the lawsuit that he’d received confirmation in 2014 that his ECF was accepted. Before taking the job, in fact, he confirmed eligibility with both the ABA and the loan servicer, FedLoan Servicing. FedLoan Servicing later sent him a letter accepting his ECF, which was attached to the lawsuit as an exhibit.
But more than two years later, the complaint says, FedLoan Servicing sent Burkhart a letter saying the ABA “do[es] not provide a qualifying service,” and therefore his participation in the PSLF program was revoked after “further research and after consulting with the department.” That means Burkhart’s 2.5 years of loan payments will not count toward loan forgiveness, despite the initial assurances of FedLoan Servicing.
The Department of Education’s answer denies that Burkhart’s ECF had ever been approved, or that its letter revoking his participation was a reversal.
Another named plaintiff in the case is an asylum officer for the federal government who formerly worked for the ABA South Texas Pro Bono Asylum Representation Project, representing unaccompanied minors seeking asylum in the United States. Other name plaintiffs in the case work for the American Immigration Lawyers Association and Vietnam Veterans of America. In some cases, the lawsuit says, the plaintiffs actually have more debt then they did when they graduated, because they made minimal payments under the impression that they were working toward loan forgiveness.
In a message to ABA staff Monday, ABA Executive Director Jack Rives said the DOE is suggesting that FedLoan Servicing’s decisions are meaningless, and that participants in the PSLF program therefore must make payments 10 years before finding out whether the DOE will accept their applications. That denies them information they need to make important employment and financial decisions.
“It’s clear that the Department of Education changed the rules in midstream,” Rives wrote. “That action forces public service employees to gamble with their financial futures and run the risk of being saddled with crushing, interest-enhanced debt.”
The case is a high priority for the ABA, Rives said.
The ABA Journal has reached out to the Department of Education for comment, but had not received a response by time of publication.