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ABA sues over Public Service Loan Forgiveness denials

Podcast: Why Washington should save Public Service Loan Forgiveness

Last year, the American Bar Association started a grassroots effort to save Public Service Loan Forgiveness for lawyers in public service and law students who planned to enter public service. Today, the ABA sued the Department of Education to honor PSLF benefits after they were retroactively denied to lawyers – including many attorneys who work for the ABA on behalf of other attorneys and law students.

Here are the details of the lawsuit:

The American Bar Association has filed a lawsuit Tuesday against the United States Department of Education to stop the Department’s decision to retroactively refuse to honor loan forgiveness commitments it made under the Public Service Loan Forgiveness Program (PSLF) to individuals who have dedicated their careers to public service.

The suit, which also includes four individual plaintiffs who were denied eligibility under PSLF, details how the Department of Education changed the eligibility requirement for work that was clearly “public service” after already approving the work and after individuals made decisions and loan repayments based on those approvals.

“Paying off what can often be substantial student debt while working a public service job is difficult,” said ABA President Linda A. Klein. “The PSLF program promised these dedicated lawyers a chance at financial stability in return for doing public service work. After following the rules, these people had the rug pulled out from under them. We cannot tolerate these actions of the Department of Education.”

The PSLF program, which was signed by President George W. Bush and enacted in 2007, provides incentives for graduates to pursue full-time public service careers by forgiving the student loan debt balance for individuals who make timely loan payments for 10 years while working full-time in a public service job. 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.

“The Department’s failure to follow the clear language of the statute is disturbing, and that’s compounded by its refusal to explain the reasons for the change or to provide for a process to appeal the new, inexplicable bureaucratic decisions,” said ABA Executive Director Jack Rives. “Its decision to apply this new policy retroactively is outrageous. This causes anguish among attorneys who learn the letters they received from the Department certifying many years of qualifying service for loan forgiveness are not worth the paper they were written on.”

The global law firm Ropes & Gray is providing pro bono representation to the plaintiffs. “Ensuring our loan forgiveness programs work effectively is critical to the efforts of public service organizations to attract and retain talent,” said Chong Park, partner at Ropes & Gray. “These dedicated and service-oriented professionals deserve a fair shake from the Department of Education.”

The complaint contends that the individual plaintiffs (Geoffrey Burkhart, Michelle Quintero-Millan, Jamie Rudert, and Kate Voigt) made financial and life decisions based on the program. Not only did they follow the rules of the program by making loan payments while employed in public service jobs, but three of the plaintiffs received verification from the DOE that their jobs qualified under the program. A fourth plaintiff, Quintero-Millan, believed she qualified because she worked in a public service job for a nonprofit that the Department of Education had already certified as qualifying for the program. The plaintiffs were later informed that their jobs no longer qualified and their previous payments did not count towards the program.

Rudert served disabled and aging Vietnam-era veterans and their families. Quintero-Millan provided legal services to unaccompanied immigrant minors on the U.S.-Mexico border. Burkhart works to improve public defender systems in the United States. Voigt educates the public about crucial issues facing immigrants in this country.

In addition, the Department of Education did not provide adequate notice or explanation of the change, and applied the changes retroactively without statutory authorization to do so. John B. King, Jr., in his official capacity as Secretary of Education, is also named as a defendant in the suit, which was filed in the U.S. District Court for the District of Columbia.

The ABA, which views the program as an essential part of its recruiting and retention efforts, was only informed that it was no longer an eligible employer for PSLF purposes earlier this year – nine years into a 10 year program. The association has lost employees who were in the program and has been told by possible hires that the loss of qualification was an important factor in not joining the ABA. The ABA filed the lawsuit after several attempts to resolve this unfair situation with the Department of Education.

The ABA is asking the court to recognize that the American Bar Association is a “public service organization” that employs individuals in “public service jobs” for the purposes of the PSLF, vacate the Department of Education’s retroactive interpretation of plaintiff eligibility, reinstate the previous eligibility certifications issued, and adopt and provide public notice of its interpretation.

Here is the complete filing of the lawsuit:

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