Back in 2007, Congress created the Public Service Loan Forgiveness (PSLF) program to provide indebted professionals, including lawyers, a path to have their student loans forgiven in exchange for working in public service for ten years. To be eligible, an individual must make 120 on-time monthly payments under a qualifying repayment plan while working full-time for a government organization or agency, 501(c)(3) organization, or other qualifying non-profit. After that time, the balance of the worker’s student loan debt would be forgiven. Nearly 500,000 people have signed up for the program, including thousands of lawyers working in public interest settings, and the first round of forgiveness is due to happen this fall, 10 years after the program’s enactment.
But a funny thing happened to a small group of lawyer borrowers last year: they learned that their eligibility for the program had been revoked. Four of these lawyers, who worked for the ABA, the American Immigration Lawyers Association, and Vietnam Veterans of America sued the Education Department. The attorneys all followed the necessary steps for the program, including filing “Employment Certification Forms” (ECF) with FedLoan Servicing, the entity that administers the program, certifying that they worked for a qualifying organization. They received notice that their jobs made them eligible for the program, but later received letters saying that the ruling had changed. The suit is ongoing, but recently the Education Department said in its answer that FedLoan’s response to the ECFs “does not reflect a final agency action on the borrower’s qualifications for PSLF.” In other words, the Department’s agent saying that the borrowers’ worked for qualifying entities did not in fact mean that they worked for qualifying entities.
Borrowers who counted on the program—and planned their lives and careers around it—are justifiably upset and scared. And while the issue with the lawsuit appears to only affect a relatively small number of attorneys, anyone who is counting on the PSLF in the future may have reason to worry. A report by the Government Accountability Office last fall found that the cost of loan forgiveness had been underestimated. Republicans have proposed eliminating the PSLF in recent budget proposals and even Obama tried to cap the benefit of the program at $57,000 back in 2015. And new Education Secretary Betsy DeVos was evasive in her answers on loan forgiveness during her confirmation process, saying she “looks forward to discussing” the program “as Congress considers its reauthorization.”
Many people have counted on the PSLF and arranged their lives around it. A recent NPR article quoted a nonprofit lawyer who has made serious life-changing decision based on the program’s promises:
Sunrise Ayers, who works for a nonprofit providing legal services to the elderly in Boise, Idaho, has about $80,000 in debt. Like many borrowers, she told us, "A lot of my life-planning decisions were made factoring the loan forgiveness into the equation." She says she turned down higher-paying jobs in the private sector, for example. "I would feel very betrayed, for both myself and my two sons, if this program is taken away," she says. "I would likely end up paying on my loans until I was in my 60s and would have no ability to save for retirement or to help pay for my children's college."
The PSLF has been an important program for thousands of attorneys who have chosen to work for the government or public interest organizations. But current law students would be right to be concerned that it may not be there for them in the near future.
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