September 01, 2016

ABA seeks answers from Education Department about abrupt changes to PSLF eligibility standards

ABA leaders met with Department of Education (ED) officials Sept. 19 to discuss the association’s strong opposition to the department’s recent action rescinding the association’s status as a qualified employer under the federal Public Service Loan Forgiveness (PSLF) Program  without warning or explanation.

Under PSLF, established in 2007, individuals who have made 120 payments on eligible federal student loans while employed full-time in qualified public service jobs become eligible to have the balance of their loans forgiven. The first group of public service workers will be eligible for forgiveness in 2017.

During the meeting with Under Secretary Ted Mitchell and his chief of staff, ABA Executive Director Jack L. Rives, President Linda A.  Klein, and President-elect Hilarie Bass emphasized the unfair impact the change has had on ABA staff and the staff of many other organizations who have participated in the program in good faith and are now told they are no longer eligible for the program.

In a letter to Mitchell prior to the meeting, Rives said the ABA is seeking the answers to three central questions:

• On what basis does the department believe it was justified to implement a new PSLF employer eligibility test eight years into a 10-year program?

• On what basis does the department believe such a material change to PSLF eligibility could be made without public notice or any due process measures?

• On what legal basis does the department rely in applying this new, secret standard retroactively, despite borrower good faith reliance on department certification approvals?

Rives requested that, until the questions are answered satisfactorily, the Department halt enforcement of the new eligibility test, restore all months of qualifying payments, and rely on public notice and comment for any material future changes.

The ABA expects a response from the department within the next month.

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