September 30, 2017

Oral arguments scheduled for Oct. 6 in ABA PSLF lawsuit

The U.S. District Court for the District of Columbia is scheduled to hear arguments Oct. 6 on the lawsuit filed last year by the ABA and four individual plaintiffs maintaining that the Department of Education (ED) abruptly rescinded eligibility for the Public Service Loan Forgiveness Program (PSLF) without providing an explanation.

The lawsuit was filed after the department began enforcing in 2015 an eligibility criterion for qualifying employment for PSLF purposes that does not appear in the statute or regulations. As a result, the ABA no longer met the requirements as a public service employer under the program.

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 are eligible for forgiveness this year. Those eligible for PSLF include prosecutors, public defenders and legal aid lawyers.

The department reiterated in its most recent filing in the case Sept. 8 that even though borrowers had received Employment Certification Form (ECF) notices over the past few years assuring them that they were on track to receive loan forgiveness under the program, the decisions issued by FedLoan Servicing, the government contractor, do not reflect a final agency action on the borrower’s qualification for PSLF.

The contractor has issued formal determinations of eligibility under the department’s established process to those seeking such determinations since 2012.

“The department’s position that its ECF decisions are merely provisional and tentative – and are not reviewable until the ultimate loan forgiveness decision is made (after at least 10 years) – defies common sense, logic and the law,” the ABA stated in a brief filed in August.

The department just recently released the form necessary for student borrowers to apply for forgiveness under the program, saying for the first time that PSLF applies only to jobs with organization with a “primary purpose” of public service or public education. Also released was the employment certification form citing the same requirement. No test for determining an organization’s primary purpose is provided, however. 

In its brief, the ABA maintained that the department’s interpretations are inconsistent with the PSLF statute and regulations and that the department failed to follow adequate process and procedure in changing its interpretations.         

 

Back to the September 2017 Washington Letter