Court Partially Grants ED’s Motion to Dismiss Loan Forgiveness Legal Challenge

By Hugh T. Ferguson, NASFAA Staff Reporter 

A federal judge has partially granted the Department of Education’s (ED) motion to dismiss a legal challenge to the administration of the Public Service Loan Forgiveness (PSLF) program — which alleged departmental mismanagement — but has permitted two claims from the lawsuit to proceed.

The case was filed last July and brought by the American Federation of Teachers (AFT) and its president Randi Weingarten, along with eight student loan borrowers who work in public service jobs. While the court determined that AFT failed to assert organizational standing, it did permit two of the claims made by the borrowers, related to violations of the Administrative Procedure Act (APA) and constitutional due process rights, to advance.  

“This decision is a big deal. It means that [Education Secretary] Betsy DeVos can finally be held directly accountable for the shameful Public Service Loan Forgiveness debacle that’s occurred on her watch,” Weingarten said in a press release. “Instead of shirking responsibility, the secretary now has to answer to the students she’s blamed and dismissed, while denying them the debt relief they’re entitled to under the law.”

The lawsuit argued that DeVos could use her authority to wipe out the student loan debt of eligible applicants and that she failed to take into consideration servicer misconduct, but the court was not persuaded.

“The Department has not ‘consciously and expressly adopted a general policy that is so extreme as to amount to an abdication of its statutory responsibilities,’” the legal document read. “The plaintiffs have not argued that any exception applies. The Court thus may not review matters concerning the Secretary’s exercise or failure to exercise of her settlement authority.” 

Applications for the first cohort of borrowers eligible for loan forgiveness were 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.

PSLF has faced a number of legal challenges since its creation, including a recent charge from California Attorney General Xavier Becerra, who is suing ED over a failure to implement the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program.

 

Publication Date: 6/24/2020


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