California Sues ED Over Public Service Loan Forgiveness Program

By Hugh T. Ferguson, NASFAA Staff Reporter

California Attorney General Xavier Becerra is suing the Department of Education (ED), citing a failure to implement the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program, which joins a number of challenges to the program’s implementation, increasingly raised since the creation of the Public Service Loan Forgiveness (PSLF) program.

Applications for the first cohort of borrowers eligible for loan forgiveness were first reviewed in 2017, but applications were denied en masse. A 2018 Government Accountability Office (GAO) report found that of the PSLF applicants, which totaled over 1 million, only 55 were approved for loan forgiveness.

The PSLF program was further amended by a spending bill — signed into law in 2018 — that  provided limited, additional conditions under which borrowers may become eligible for loan forgiveness if some or all of the payments made on Direct Loans were under a nonqualifying repayment plan. This reconsideration, which included the Graduated Repayment Plan, Extended Repayment Plan, Consolidated Standard Repayment Plan, and Consolidated Graduated Repayment Plan, is referred to as the TEPSLF opportunity. 

A subsequent GAO report released in September 2019, however, found ED’s process for obtaining forgiveness through TEPSLF “is not clear to borrowers.” That same report found that as of May 2019, 70% of the 53,523 unsuccessful TEPSLF applicants were denied because they had not first submitted a PSLF application.

According to recent ED data published in its Federal Student Aid Data Center, as of April 2020, roughly 6% — or about 1,800 — of the nearly 31,000 TEPSLF requests received by borrowers who had previously submitted a PSLF application were approved. Of those denied, the most common reasons were that the borrower had not been in repayment for 10 years (31%), did not meet the TEPSLF payment requirements for payments during the last 12 months (20%), or did not have 120 qualifying payments (16%).

In the lawsuit, Becerra alleges that ED has failed to timely implement TEPSLF and has violated the Administrative Procedure Act (APA), arguing the agency’s behavior “constitutes unlawfully withheld action, constitutes unreasonably delayed agency action, and is arbitrary, capricious, or otherwise not in accordance with the law.”

Additionally Becerra said that while many of the program’s applicants have completed the public service and loan payment requirements necessary for loan qualification, nearly all of them have had their applications denied by Education Secretary Betsy DeVos.

“College graduates who put in a decade of hard work and made timely payments on their student loans earned their TEPSLF loan forgiveness. But Education Secretary Betsy DeVos chose to ignore all of that,” Becerra said. “Today's lawsuit reminds Secretary DeVos that she is not above the law. She is accountable to these college graduates who followed the rules and deserve better, especially amidst an economic crisis of historic proportions.”

 

Publication Date: 6/4/2020


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