June 22, 2017

The Gamble of Public Service Loan Forgiveness

ABA President Linda Klein talks about the Public Service Loan Forgiveness program and how it has fallen short.

Young lawyers are needed to fill public service roles but often law school debt funnels them into higher paying positions. The Public Service Loan Forgiveness (PSLF) program was aimed to help this issue by forgiving student debt after ten years of qualifying employment at the local, state, or federal level. In this episode of the ABA Law Student Podcast, host Chris Morgan talks to ABA President Linda Klein about the PSLF program, how it has fallen short, and the resulting suit that the ABA filed against the Department of Education. She also discusses the future of the trial and how to raise awareness as it continues.

Linda Klein is the current President of the American Bar Association. In her practice life, she is managing shareholder for the Georgia offices of Baker, Donelson, Bearman, Caldwell & Berkowitz, LLP.

Listen to the episode

Featured Guest

Linda Klein

Linda Klein practice includes most types of business dispute prevention and resolution, including contract law, professional liability, and risk...

Your Host

Chris Morgan

Chris Morgan is the 12th Circuit Governor for the ABA Law Student Division. He is 3L at Gonzaga University...



Intro: Welcome to the official ABA Law Student Podcast, where we talk about issues that affect law students and recent grads. From finals and graduation to the bar exam and finding a job, this show is your trusted resource for the next big step. You are listening to the Legal Talk Network.


Chris Morgan: Hello and welcome to another edition of the ABA Law Student Podcast here on Legal Talk Network.

I am Chris Morgan, Governor of the ABA Law Student Division’s 12th Circuit and a graduate in 3L at the Gonzaga University School of Law in Spokane.

Our show today is sponsored by the American Bar Association’s Law Student Division. In this monthly podcast, we cover topics that are of interest to you, law students and recent grads. We hope the show is a trusted resource for all of our listeners.

For today’s show, we once again welcome Linda Klein, President of the American Bar Association. Linda earned her JD at Washington and Lee law school in Virginia and is a senior managing shareholder at Baker, Donelson. She is listed in the best lawyers in America, Who’s Who in America as well as Chambers USA. She is regularly named to Super Lawyers Top 100 in Georgia, an honor bestowed upon only nine women in 2014.

Linda, thanks for coming on today to give us some insight and follow-up regarding the ongoing Public Service Loan Forgiveness Program. We really appreciate it.

Linda Klein: I’m glad to be here. This is a very, very important topic and law students and young lawyers alike especially should be well informed about it.

Chris Morgan: So since it’s been a little bit of time since we last talked here on the program, and before we get to some of the more recent developments, I would like to start, if we could, with just kind of a summary of what happened with the rescission of these loan promises and what led the ABA to file suit back in December of last year?

Linda Klein: Well the Public Service Loan Forgiveness Program was signed into law by President George W. Bush and enacted in October of 2007, and that’s an important date to remember, because it provides incentives for graduates — and not just law school graduates, to pursue full-time public service careers by forgiving student loan balances for individuals who make timely loan payments for 10 years while working in a full-time public service job. That’s why I said 2007 was an important date, because as you know 10 years is about to come up.

And so over the years lawyers and other professionals entered their professional careers as you know carrying a lot of debt, and instead of choosing lucrative jobs where they could easily pay back their debt, they opted for public service. And when the Public Service Loan Forgiveness Program was contemplated and when it was authorized, it expected that these people would accept these jobs.

The purpose was to provide Federal support at a time when the country was facing a widening gap between the demands on public service and the ability to meet the demand. More and more Americans were relying on public servants, particularly in the recession that followed and there just weren’t enough people willing to meet that demand.

So that’s how the Public Service Loan Forgiveness Program got started. The ABA was there at the beginning of it and knows about it and supported the Public Service Loan Forgiveness Program getting started.

So over the years the Department of Education and its contractor, they developed a certification form which people could send in and say that they were making this many payments and this is the job that they had and they would receive back a certification process that told them that they were indeed qualify.

And all of a sudden last year, at least some lawyers that we know, they started getting letters saying — those letters you got saying that you were certified and you made this many payments, well we take that all back. You can’t rely on those letters. So we at the American Bar Association were horrified by that. People had relied on this program, they relied on these certifications and all of a sudden the rug was being pulled out from under them.

And many people saw their loan balances grow because in paying roughly 10% of their salary every month for over these years because they owed so much money, their loan balances were growing and in one case we know someone’s loan balance has doubled. This is just absolutely unconscionable.

Staff leadership of the American Bar Association went to meet with leaders at the Department of Education. Last September I met with leaders at the Department of Education.


We were unable to get them to change their minds, and so on December 23rd, 2016, we filed a lawsuit, the ABA is a plaintiff as our four individuals and we want the Department of Education to be held accountable for the promises that it made to these individual borrowers who made a choice to dedicate their lives to public service.

Chris Morgan: Right. So back on March 24th in the interim between when we last talked and now, it sounds like the Department of Education responded to the ABA’s lawsuit. What was contained in their response? What do they have to say back?

Linda Klein: I can tell you that it defies logic. It is a very disappointing answer. It puts people who are working in public service jobs in an untenable position of being forced to wait 10 years to find out whether their jobs qualify them for loan forgiveness.

And of course by that time these lawyers and others, these borrowers can face debt loads as we mentioned before that are far higher than the amount they originally borrowed, because of all the money that they had to borrow to go to law school, and we’re putting these young lawyers and their futures into financial peril if they are found at the end of 10 years to be ineligible when they had every reason to believe they had been eligible.

What the Department of Education says in their response to the lawsuit is that their contractor, the name of which is FedLoan Servicing, does not have the authority to determine the eligibility of a lawyer’s public service job, and they’re saying this even though they hire FedLoan Servicing to send out these eligibility notifications to lawyers when they’re seeking to qualify for loan forgiveness.

So what the answer suggests is that the process it has established for making eligibility decisions is irrelevant. You can’t rely upon it even by borrowers who were told that their employment was eligible for the program through that certification process.

And the Department of Education is refusing to accept any responsibility for its failures in administering the Public Service Loan Forgiveness Program and its role in putting all these young lawyers and maybe others at financial risk.

What they say in the answer is that, that the process — it’s very cumbersome in my opinion, extremely illogical process. First you need to spend 10 years in your job. Then after 10 years, you need to apply for loan forgiveness, and only after that the Department of Education decides if the employment was eligible over all those 10 years.

And in the meantime if these young lawyers were given assurances by this FedLoan Servicing that their employment qualified for the Loan Forgiveness Program, the Department of Education says these assurances mean absolutely nothing.

Chris Morgan: So pretty much what they are saying then is go ahead, make payments over 10 years, rely on forgiveness, make your life choices and then at the end we will tell you whether or not those payments that you made over the last 10 years are actually going to matter or not.

Linda Klein: Exactly. They are asking people to gamble with their financial future. Think about it, what is the Department of Education paying FedLoan Servicing for if their determinations are meaningless and unreliable.

Chris Morgan: So is there any indication to your knowledge from the Department of Education or from FedLoan Servicing, or to anyone else that these certifications that FedLoan was sending out were only supposed to be viewed as tentative because I mean as we know now over the last 10 years it sure seems like people thought they were a sure thing.

Linda Klein: Not until I read this answer.

Chris Morgan: Right. So I wrote an editorial for Northwest Lawyer magazine recently about this whole thing and what really surprised me was not only that people didn’t know about it, but the way that it really has become a two-way street because it’s not only students having to struggle with this but public service organizations are now going to have trouble attracting and retaining top talent as well.

The ABA being one of those public service organizations have you guys had trouble explaining that to potential employees?

Linda Klein: Oh! This clearly is a problem for the American Bar Association. The ABA is a nonprofit, nonpartisan organization dedicated to public interest law service. The ABA, in reading the statute, meets the criteria that was set out by the Department of Education to qualify and then suddenly and without explanation, ABA employees are being informed that the ABA doesn’t qualify.


And the ABA is not alone in this. The ABA and many other nonprofit organizations now are going to struggle to retain and attract talented, committed professionals who want to do this work.

Some of the ABA staff, particularly those that are connected with the ProBar program which provides pro bono representation to individuals seeking asylum at the Texas border, many of them unaccompanied children, some of that staff they’ve resigned, they’ve given notice, they’ve expressed severe concern about the ABA no longer being a qualified public service loan forgiveness employer.

And we’ve had people that have interviewed for jobs that say if they can’t be assured of public service loan forgiveness then they’re not going to be in a position to take them. And I understand how they feel to wait for 10 years to see whether or not you’ve qualified after you’ve done everything else that’s been asked is a real problem.

And this isn’t just the ABA, so when you think about helping veterans, domestic violence victims, refugees, homeless, elderly, mentally challenged, children, so many others and you can see in the lawsuit the people who are the named plaintiffs. This is the kind of work they do and I don’t know how this country is going to continue meet the demand for the work that’s needed if we discourage people from going into public service.

Chris Morgan: So on the topic of notice in on a comment period has the Department of Education responded to concerns in the ABA’s lawsuit regarding the Administrative Procedures Act and why there was never any type of notice or comment period for them changing an interpretation of how public service was to be defined?

Linda Klein: Well you’re right that they are required to have a notice and comment period and that is part of what will be discussed as a lawsuit progresses but as far as the plaintiffs are concerned there was no appropriate notice and comment period.

Chris Morgan: So it sounds like a discovery schedule maybe has been set moving forward, is there a timetable for litigation or kind of where we at right now?

Linda Klein: So there was a hearing before a federal judge in Washington DC and I understand that discovery will move forward, that the plaintiffs, that would be the American Bar Association and the four named plaintiffs, would file their motion for summary judgment by May 24.

The government intends to file a motion for summary judgment on June 23 and that also would include a response to the plaintiff’s motion for summary judgment and then the plaintiffs would have time for opposition and reply on July 24th and then the government would have until August 14 to reply, so that’s the schedule, that’s been set by the court as of this date. So things are moving pretty quickly.

Chris Morgan: Yeah.

Linda Klein: It’s rare that a lawsuit moves forward this quickly. I mean we’re doing this recording on May the 9th and a motion for summary judgment is going to be filed on May the 24th.

Chris Morgan: Right and it’s certainly an issue where time is of the essence especially for classes of borrowers who are graduating this week or next week like students that I go to school with who are trying to make decisions right now about what Avenue of law there are going to pursue and are watching this pretty closely. So it’s definitely a time is of the essence sort of issue for a lot of students right now.

Linda Klein: Well the American Bar Association feels that way for sure. The American Bar Association is concerned about the students who are graduating now and also the people who have been in this program and relying on this program for years. They’re in a very, very difficult position. So time is of the essence.

Chris Morgan: So in the interim here what can law students and young lawyers be doing kind of on a grassroots level to get involved and to raise awareness about what’s happening here?

Linda Klein: The ABA had a social media campaign hashtag loan 4giveness and that would be a good idea to continue that program so that people can remain involved and informed about what’s going on. There can be all kinds of links to some of the documents as they come forward.

There’s been a lot of media attention to this particular lawsuit into this program. So there’s a lot of coverage available and if people start sending it around again on Twitter and other social media that’s certainly a good way. But if I were a law student thinking about a public service career I would definitely be following this lawsuit very, very closely.

Chris Morgan: Okay. Well President Klein thank you again so much for taking the time to come on today and chat with us. I know you’re pretty busy out there and there’s a lot going on. So I really appreciate you taking the time to come on and I’m sure we haven’t quite heard the end of this.


Linda Klein: I think that would be accurate. We have not heard the end of this but we are certainly in this fight to the end.

Chris Morgan: All right. Well hey thank you I appreciate that.

Linda Klien: Thank you.

Chris Morgan: That’s it for us here today on the ABA Law Student Podcast on Legal Talk Network. As always make sure to check us out on iTunes and rate and review the program. You can also reach us on Twitter, @abalsd.

Until next time, I am Chris Morgan. Thanks for tuning in.


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