ABA settles PSLF lawsuit

The U.S. Department of Education has agreed to recognize employees of the American Bar Association as public service workers who are eligible for student loan forgiveness. This settles a 2016 lawsuit in which the ABA accused the department of improperly running the Public Service Loan Forgiveness program

On Feb. 18, the department sent a letter to the ABA, acknowledging that full-time ABA employees are “employed in a public service job” with “a public service organization,” and therefore are eligible for student loan forgiveness under PSLF.

The settlement comes one year after a federal judge ruled against the Education Department, saying the department had improperly changed the PSLF program for some individuals employed by nonprofit organizations. On Feb. 22, 2019, U.S. District Judge Timothy J. Kelly in Washington, D.C., ruled that those changes, made several years after the program began, were “arbitrary and capricious.”

“We are pleased the Department of Education now fully accepts providing loan forgiveness to many people who rightfully earned it,” ABA Executive Director Jack Rives said. “Without the dedicated public service of so many attorneys, our nation would not be able to provide services to those in need. Student loan forgiveness is a small but very meaningful way to repay young people who spend 10 years of their lives in lower-paying jobs to serve the public.”

The ABA and four public servants, represented by the law firm of Ropes & Gray, sued in December 2016. The lawsuit detailed how the department changed eligibility requirements after individuals had made major life decisions based on prior approvals.

The ABA argued that the department and its contractor, FedLoan Servicing, hurt employees of some nonprofit groups by initially telling them they qualified for loan forgiveness, then reneging on those promises years later. Kelly agreed, ruling that the Education Department’s rule changes had “an immediate and significant impact on their ability to plan their careers and finances.”

The PSLF program, enacted in 2007 and signed into law by President George W. Bush, provides incentives for graduates to pursue full-time public service careers. It provides a mechanism to forgive student loan debt balances people who make timely loan payments for 10 years while working full-time in public service jobs. The program broadly defines public service jobs as those providing “public interest law services,” “public education,” “public service for individuals with disabilities” and “public service for the elderly,” among a variety of other categories.

Related links:

• The Feb. 18 letter from the Education Department to the ABA
• The December 2016 lawsuit
• The judge’s ruling of Feb. 22, 2019
• Background information on the Public Service Loan Forgiveness program
• ABA Journal: All full-time ABA employees are eligible for federal loan forgiveness program after litigation settles