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Decision may be near in ABA suit to enforce PSLF promises

Podcast: Why Washington should save Public Service Loan Forgiveness

A decision on the ABA’s lawsuit against the U.S. Department of Education over the agency’s move to retroactively disqualify employers from the Public Service Loan Forgiveness Program is expected soon.

The suit was filed in December 2016, and both sides have filed motions for summary judgment and their respective responses. In the meantime, the DoE has altered two PSLF forms to state that only organizations whose “primary purpose” is public service or public education are eligible PSLF employers.

What constitutes a promise?

PSLF was signed into law by President Bush in 2007 and was designed to incentivize students with advanced degrees to apply their skills to careers in public service.

The program forgave the balance of student loan debt if students made timely monthly payments for 10 years while working at an approved public service employer—usually government agencies and non-profit organizations. The payments amounted to roughly 10 percent of the student’s monthly income.

About 553,000 students, according to Forbes, applied for the program, and the first of this group were set to apply for loan forgiveness in October 2017. At least they were, until last spring, when they received letters from the DoE informing them that they no longer qualified for loan forgiveness.

The DoE asserted that previous decisions to certify employers as PSLF eligible were “interim” and subject to be changed at any time.

Many PSLF applicants now complain that they feel as though, after making nine years of payments, the rug was pulled out from them.

What the ABA is arguing

It’s the ABA’s position that the DoE’s actions are unfair and unconscionable. Its complaint requests declaratory and injunctive relief requiring the agency to fulfill the promises it made to PSLF applicants and their employers.

In the litigation, the phrase “primary purpose” is key. The DoE insists this term is “informal” and doesn’t amount to a policy change. The ABA disagrees and asserts that the DoE has substantially changed its policy on PSLF-eligible employers.

John Dey, an attorney with Ropes & Gray who represents the ABA pro bono, was quoted in the ABA Journal stating, “There is clearly a kind of common theme of inserting limiting definitions as they go along and saying it’s not policy.”

If the language does amount to a change in DoE policy, it directly contradicts statutory procedures for modifying regulations requiring public notice and comment periods, the ABA argues.

To hear more on PSLF, listen to ABA President Linda Klein discuss the issue on the ABA Law Student Podcast.

Rick Adams Rick Adams is a 3L at the University of Louisville Brandeis School of Law and a member of the Law Student Division Editorial Board. He currently works as a law clerk at the Office of the Commonwealth’s Attorney in Jefferson County, Ky. Rick is the Executive Editor of the University of Louisville Law Review.