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New Fears For Public Service Loan Forgiveness

A legal motion the Department of Education filed yesterday could have big ramifications for half a million teachers, social workers, police officers and other public servants. The motion asserts that there has been no final decision on whether these people will have their student debt forgiven, as they had believed.

Public Service Loan Forgiveness was created a decade ago. A 2016 blog post, which still appears on the official ed.gov website, describes it as a "broad, employment-based forgiveness program for federal student loans." Anyone who works for the government or a nonprofit can have their loans erased after 10 years of on-time monthly payments, the post explains.

If you're doing the math, that means the first group of borrowers should have their loans forgiven this fall.

Seems pretty simple, but yesterday's filing suggests otherwise.

A group of lawyers and the American Bar Association are currently suing the Department of Education, for allegedly changing its position on whether their employers qualify for PSLF. (The American Bar Association is a professional association, for example, not a 501(c)3 nonprofit.)

In a move that might be overshadowed by news coming out of the Justice Department on affirmative action, the department filed yesterday for "summary judgment," meaning it wants the case settled without trial.

The argument? The department says it has taken no final action on any of those half a million PSLF applicants. It may have accepted their paperwork, the filing states, but those are only "interim, non-binding, individualized determinations."

In fact, the filing states that final eligibility for PSLF is decided only after those 10 years of payments:

"Once a borrower has made 120 qualifying payments, she may submit an application for PSLF."

Our previous reporting has showed that many people in the last 10 years made binding life decisions based on the promise of Public Service Loan Forgiveness. They chose lower-paying jobs in the public sector, and enrolled in payment plans, as instructed, that left their loans piling up interest. Ten years into their careers, if stuck with thousands of dollars in debt they hadn't planned on, many will have to forego buying a home or saving for retirement.

"The expectations and financial well-being of thousands of dedicated public servants hang in the balance in this case," Chong Park, a partner at the law firm Ropes & Gray representing the ABA and the individual plaintiffs, said in a statement. "In its new filing, the Department of Education unfortunately reiterates that it has no intention of upholding promises made under the very program it created. We find this position unfair and unlawful."

The Department of Education had no immediate comment.

Copyright 2017 NPR. To see more, visit http://www.npr.org/.

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