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The future of PSLF: Law school loans under fire

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PSLF

For the greater part of the last decade, the Department of Education’s   (DOE’s) Public Service Loan Forgiveness program (PSLF) has served as a beacon of hope and stability for thousands of public sector professionals struggling with the burden of educational debt.

The PSLF was enacted in September 2007 with overwhelming bipartisan congressional support. It was a response to drastic increases in the cost of education and the amount of debt that students incurred as a result of educational investments. As part of the larger College Cost Reduction and Access Act, the PSLF would first and foremost function as an incentive for students to pursue long-term, full-time careers in public service and public interest law. Though not limited exclusively to the legal profession — the PSLF covers a broad range of occupations including health professionals, teachers, and first responders — new lawyers have relied on the PSLF to pursue careers with organizations that engage in important public interest work.

At its inception, the PSLF offered a straightforward promise to law students and new lawyers. First, work in a qualified public service job for a term of 10 years. The DOE issues certifications at the start of the term based on an individual’s eligibility for the PSLF. Second, make timely monthly payments, capped at a percentage of the borrower’s income, for the entirety of that term. Then, at the end of the 10-year period, the remaining balance of your loans will be forgiven and discharged.

Maintaining a broad and sustainable PSLF program is crucial to the future of public interest law

Under the original PSLF program, “public service” was defined broadly to include organizations that provide public education services, public interest legal services, public service for those with disabilities, and public service for the elderly. The broad language demonstrates the legislature’s intent to not only incentivize work in traditional government jobs such as prosecution and public defense, but to incentivize careers in a number of nontraditional legal organizations that provide services to an underserved and often indigent clientele.

Over the last several years, law students and new lawyers have relied on the incentives provided by the PSLF to make crucial and far-reaching decisions about the direction of their legal careers. Students are leaving law school with more debt than ever before. Because of that, many young lawyers face a distressing career crossroads: They can either pursue a job that pays the most, regardless of their interest in the job itself, or they can pursue a lower-paying job that fits their career objectives, but then watch as the balance on their law school debt continues to skyrocket. It is important to note that not every public interest lawyer is put in this position. There are many who would spend their entire careers in public service regardless of salary. But having to make this choice is a reality that many new lawyers do face, and a reality that the legislature aimed to alleviate through the PSLF.

The value of the program is not just a one-way street for young lawyers. The PSLF is critical to the public sector’s ability to recruit and retain top talent. Acknowledging a sizable gap between the salaries at private firms and those at government institutions and nonprofit legal organizations, employers often rely on PSLF to incentivize prospective employees to join their organization. It becomes mutually beneficial. Employers are able to attract top talent, while employees are able to engage in extremely valuable public interest work with the financial peace of mind that their loans will be forgiven after a specified period of time.

Changing tides

In 2016, nearly 10 years after PSLF was enacted, the DOE narrowed its definition of public service and excluded a number of organizations from qualification for the PSLF. Despite previously issuing promissory certifications to lawyers who worked in those organizations acknowledging that their employment qualified, the DOE has now issued a rescission of those promises and is refusing to honor them.

Applying its new interpretation retroactively, the DOE has informed lawyers who have for worked up to nine years in qualifying PSLF organizations and who were set to have their loans forgiven that they no longer qualify. Their previous payments towards PSLF no longer count. These lawyers, many of whom are still six figures in debt, have essentially been “shown the door” by the very same DOE they entrusted their legal careers to nearly a decade ago.

The DOE’s rescission was given without notice, without explanation, and without time for public comment. Lawyers who relied on the PSLF to engage in important public service work have been denied loan forgiveness on the grounds that this work no longer qualifies as “public service.” All of the time they have spent in public interest work and the previous PSLF agreements count for naught in the eyes of the DOE.

The ABA’s lawsuit

On December 20, 2016, The American Bar Association (ABA), through pro bono counsel from the Washington, D.C., office of Ropes & Gray, filed suit against the DOE. The suit, filed in the U.S. District Court for the District of Columbia, alleges that the DOE engaged in arbitrary and capricious agency action and failed to make required information available to the public. In addition to alleging violations of the Administrative Procedures Act, the suit alleges violations of due process under the Fifth Amendment.

To give an example of the kind of work that no longer qualifies, attorney Michelle Quintero-Millan, a named plaintiff in the suit, provides legal services to unaccompanied immigrant minors on the U.S.-Mexico border. Attorney Jamie Rudert, another named plaintiff, provides legal services to disabled Vietnam-era veterans and their families.

Why it all matters

This issue is deeply rooted in notions of fairness, estoppel, and government accountability. If we as law students and lawyers are bound by the contracts that we sign and the promises that we make, shouldn’t the federal government be held to that same standard?

Changing legislation to reflect budgetary concerns is one thing. But to apply it retroactively without explanation, without notice, and at the expense of hardworking public interest lawyers, can only be described as inequitable and deceitful. PSLF lawyers made life and career decisions based specifically on a promise made by an agency tasked with protecting the educational interests of students. This administrative action is not in accordance with the law, nor is it in accordance with the principles of good faith that students, lawyers, and student loan borrowers rightfully expect from the federal government.

Maintaining a broad and sustainable PSLF program is crucial to the future of public interest law in our state. Washington prides itself on being progressive, diverse, and inclusive. With that said, our diverse communities necessitate diverse resources in order to meet their needs. This means supporting the sustainability of organizations that provide valuable non-traditional legal resources to our citizens. Whether it’s broad access to counsel in housing disputes, or more specified access to immigration or veteran’s resources, we have an expansive need for broad access to justice.

Reliance on the PSLF is not only one of the main incentives for a lawyer to pursue public interest work after graduating, it’s a main reason many students go to law school in the first place. The University of Washington, Seattle University, and Gonzaga University all pride themselves on producing high-quality lawyers who dedicate their professional lives to careers in public service. Without a broad definition of public service that allows lawyers to qualify for loan forgiveness in a wide range of public service organizations, these organizations’ ability to attract and retain the resources that they need will suffer.

Protecting PSLF and supporting a broad definition of public service not only provides young lawyers with a semblance of financial relief, but it protects the sustainability of the vital public service organizations for whom they work. Supporting the PSLF program and these organizations is imperative to protecting the rule of law and providing broad and diverse access to justice for the people of our state.

This article appeared in the April/May 2017 issue of the Washington State Bar Association’s official publication, NWLawyer, and is reprinted with permission from the Washington State Bar Association.

Chris Morgan Chris Morgan is a 3L at the Gonzaga University School of Law and Governor of the Law Student Division’s 12th Circuit. Chris has published editorials on civic engagement and public policy for some of the Northwest’s largest newspapers including The Oregonian, The Columbian, The Spokesman Review, and the Portland Tribune.

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