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April 01, 2017

Education Department responds to ABA’s PSLF lawsuit

In response to a lawsuit filed in December by the ABA and four other plaintiffs, the Department of Education (ED) issued an answer March 28 indicating that those who were provided with approval for participating in the Public Service Loan Forgiveness Program (PSLF) cannot rely on information provided to them by the organization contracted by the department to administer the program.

The ABA filed the lawsuit after the department rescinded without explanation the association’s status as a qualified employer under PSLF and notified ABA employees and others who had previously been approved for participation in the program that they no longer qualified. ABA leaders had met with department officials in September to discuss the association’s strong opposition to the department’s action.

PSLF was established in 2007 to forgive federal student loans for individuals who work in a wide range of public service jobs, including jobs in government and nonprofit charitable organizations. The program provides forgiveness of remaining debt after 10 years of eligible employment and 120 qualifying loan payments, and the first group of public service workers will be eligible for forgiveness this year. Those eligible for PSLF include prosecutors, public defenders and legal aid lawyers.

ED regulations define public service to include government, 501(c) (3) charitable organizations and certain non-501(c) (3) organizations that provide any of a list of public services, including public interest law and public education. Employees wishing to participate in the PSLF program are encouraged by the department to periodically submit an Employment Certification Form (ECF) created by the department to determine whether they are meeting the PSLF eligibility requirements.

The ABA lawsuit is seeking to restore the association’s longtime status as a qualified employer, vacate the department’s retroactive interpretation of the plaintiffs’ eligibility, and reinstate the previous eligibility certifications that had been issued.

The ED response to the lawsuit maintained that even though borrowers had received ECFs assuring them that they were on track to receive loan forgiveness under the PSLF program, the decision issued by FedLoan Servicing, the government contractor, “does not reflect a final agency action on the borrower’s qualification for PSLF.”

ABA President Linda A. Klein maintained that “borrowers have had the rug pulled out from under them,” explaining that the Education Department “is putting lawyers who have been working in public service jobs in this untenable position of being forced to wait 10 years to find out whether their jobs qualify them for Public Service Loan Forgiveness.”

There is also congressional concern about the program. Thirty-six senators sent a letter April 6 to Secretary of Education Betsy DeVos about the department’s “lack of consistent, transparent and fair treatment” of borrowers participating in the PSLF program.

“It is unacceptable for the department to have told students they may rely on PSLF to help pay their students loans, only to have that assurance suddenly revoked,” the letter said. “Borrowers who have been told in error that their employers qualify for PSLF should at a minimum be grandfathered in for the period for which they were previously approved, even if the department intends to change its determination about qualifying employment going forward.”

The senators requested that the department further define and formally clarify the types of eligible employers that qualify for PSLF, provide clarity and support in communications denying employment certification, and fully digitize the PSLF employment certification process.   



Back to the April 2017 Washington Letter