The American Federation of Teachers (AFT) sued the Department of Education (ED) Thursday, claiming that the agency arbitrarily rejected its members’ applications for the Public Service Loan Forgiveness (PSLF) program.
In the lawsuit—filed by AFT President Randi Weingarten and eight borrowers who were denied forgiveness—the plaintiffs requested that their loans be forgiven immediately and that the court direct ED to share with applicants the “decision-making process that minimizes the risk of erroneous denials, a meaningful opportunity to contest denials, and a written, reasoned explanation for its decisions.”
“Millions of public servants have relied on PSLF in taking out student loans. But ED—the very agency that is supposedly the champion of our nation’s education system—has failed to live up to its role in administering this program,” the plaintiffs wrote. “ED has failed to make good on Congress’s promise, denying PSLF to applicants on arbitrary and capricious grounds, without any meaningful process to review erroneous decisions or to ensure that Title IV loan servicers provide accurate guidance to borrowers regarding their eligibility for loan forgiveness.”
ED in May 2018 announced it would begin reconsidering applications under the Temporary Expanded PSLF (TEPSLF) program, with $700 million allocated from Congress over two years. The intent was to expand PSLF to borrowers who made all or some of their 120 monthly payments under extended or graduated repayment plans, rather than an approved repayment plan. A borrower’s application would be reconsidered, according to ED, if it was previously denied because “some or all of the payments were not made under a qualifying repayment plan for PSLF.” In the lawsuit, however, the plaintiffs argued that this program has also been “mismanaged,” citing that as of March 2019, only 3.6% of applications for TEPSLF have been approved.
The plaintiffs argued that some of them were denied forgiveness through both the PSLF and TEPSLF program because ED miscounted their payments, even though they correctly made 120 qualifying payments. “Every time these plaintiffs tried to point out the errors, ED provided inconsistent and still incorrect counts,” they wrote, adding that their files were then closed with “no clear explanation.” Other plaintiffs argued that their loan servicers erroneously told them their loans qualified them for the program, or that they were enrolled in qualifying repayment plans.
“While DeVos dithers, millions of public service workers miss car payments, sink deeper into credit card debt and struggle to care for sick relatives. This deliberate sabotage of a bipartisan government initiative cannot be allowed to stand,” Weingarten said in a press release. “... Instead of helping the millions of Americans owed debt relief under [PSLF], DeVos has hurt and pauperized them. And instead of working with lawmakers to improve the program that millions of teachers, firefighters, nurses and first responders deserve, DeVos has vandalized it.”
POLITICO reported that ED spokesperson Liz Hill wrote in an email that ED "doesn't comment on pending litigation" but that it "is faithfully administering the complex program Congress passed."
The PSLF program has been the subject of criticism and lawsuits since it was created in 2007, (though the first cohort of borrowers who applied for the program were only eligible for forgiveness beginning in 2017.) Most recently, in February a federal judge ruled that ED must reconsider the PSLF denial letters of three of four lawyers who filed a case against the agency in 2016. ED originally denied the lawyers forgiveness because it claimed that their employers did not meet the program requirements for forgiveness, specifically that public service was not the “primary focus” of the employers.
ED has created a PSLF help tool to assist borrowers in better understanding the PSLF program, informing them of any necessary or suggested actions to take in order to qualify and helping them self-assess their eligibility using employment information. As of March 2019, however, ED has rejected 99% of processed applications for PSLF. Around 10,000 applications are still pending. Overall, 518 borrowers have received about $30.7 million in debt relief, with the average borrower receiving a discharge of $59,244.
Publication Date: 7/12/2019