Dept of Ed Rescinding Some Public Service Loan Forgiveness Certifications

March 31, 2017

Are you one of the 550,000+ people who have registered for Public Service Loan Forgiveness? This is the federal program that forgives the remaining balance on qualifying student loans after 10 years of payments while working full-time for a qualifying public service employer. If so, you’ll likely want to read the article in yesterday’s New York Times which reports that “thousands of approval letters that have been sent by the administrator, FedLoan Servicing, are not binding and can be rescinded at any time,” per the Department of Education. From the article:

Four borrowers and the American Bar Association have filed a suit in United States District Court in Washington against the department.

The plaintiffs held jobs that they initially were told qualified them for debt forgiveness, only to later have that decision reversed — with no evident way to appeal, they say. The suit seeks to have their eligibility for the forgiveness program restored….

The idea that approvals can be reversed at any time, with no explanation, is chilling for borrowers. Mr. Rudert [an attorney at a non profit legal aid group and one of the plaintiffs], who graduated from law school owing nearly $135,000 on student loans, said he would have picked a different employer if he had known that his work… would not qualify.

Although no explanation was given for the denial, it appears that the questions generally center around whether certain nonprofit organizations qualify as public service employers.

Hat tip to my colleague, Kris Turner, for alerting me to this story.