ABA Files Suit Over Loan Forgiveness

by Marc Ether on

The ABA says the government is reneging on a promise to forgive the loans of lawyers who go into public service

Whether it’s helping people with disabilities, the elderly, or economically disadvantaged school children, public service has long been a way for young lawyers to find relief for the massive debt they’ve accrued at law school. But lately, says the American Bar Association in a new lawsuit against the federal Department of Education, the government’s loan forgiveness promises have proven hollow.

The ABA filed a lawsuit Dec. 20 against the ED to stop a decision to retroactively refuse to honor loan forgiveness commitments made under the Public Service Loan Forgiveness Program to individuals who have dedicated their careers to public service. According to an ABA announcement, the suit includes four individual plaintiffs who were denied eligibility under PSLF when the ED changed the eligibility requirement for work that was clearly “public service” after already approving the work — and after the four individuals, and many others, made decisions and loan repayments based on those approvals.

“Paying off what can often be substantial student debt while working a public-service job is difficult,” ABA President Linda A. Klein said in a news release. “The PSLF program promised these dedicated lawyers a chance at financial stability in return for doing public-service work. After following the rules, these people had the rug pulled out from under them. We cannot tolerate these actions of the Department of Education.”

BROAD DEFINITION OF ‘PUBLIC SERVICE’

The PSLF program was signed by President George W. Bush and enacted in 2007. The program defines public-service jobs somewhat broadly as those providing “public-interest law services,” “public education,” “public service for individuals with disabilities,” and “public service for the elderly,” among a variety of other categories, while providing incentives for graduates to pursue full-time public-service careers by forgiving the student loan debt balance for individuals who make timely loan payments for 10 years while working full-time in a public-service job.

“Ensuring our loan forgiveness programs work effectively is critical to the efforts of public-service organizations to attract and retain talent,” said Chong Park, partner at Ropes & Gray, a global law firm providing pro bono representation to the plaintiffs. “These dedicated and service-oriented professionals deserve a fair shake from the Department of Education.”

The complaint contends that the individual plaintiffs — Geoffrey Burkhart, Michelle Quintero-Millan, Jamie Rudert, and Kate Voigt — made financial and life decisions based on the program. Not only did they follow the rules of the program by making loan payments while employed in public service jobs, the ABA contends, but three of the plaintiffs received verification from the ED that their jobs qualified under the program. A fourth plaintiff, Quintero-Millan, believed she qualified because she worked in a public-service job for a nonprofit that the ED had certified as qualifying for the program, the ABA says in its lawsuit.

The plaintiffs were later informed that their jobs no longer qualified and their previous payments did not count toward the program, the ABA says. Rudert served disabled and aging Vietnam-era veterans and their families; Quintero-Millan provided legal services to unaccompanied immigrant minors on the U.S.-Mexico border; Burkhart works to improve public defender systems in the U.S.; and Voigt educates the public about immigration issues.

CHANGE COMES 9 YEARS INTO A 10-YEAR PROGRAM

The 400,000-member ABA isn’t only concerned about law school graduates. It views the PSLF as an essential part of its recruiting and retention efforts, ABA Executive Director Jack Rives said in the news release. Yet the ED only informed the ABA that it was no longer an eligible employer for PSLF purposes earlier this year — nine years into a 10-year program.

Rives said the group has lost employees who were in the program and has been told by possible hires that the loss of qualification was an important factor in not joining the ABA.

“The Department’s failure to follow the clear language of the statute is disturbing, and that’s compounded by its refusal to explain the reasons for the change or to provide for a process to appeal the new, inexplicable bureaucratic decisions,” Rives said. “Its decision to apply this new policy retroactively is outrageous. This causes anguish among attorneys who learn the letters they received from the department certifying many years of qualifying service for loan forgiveness are not worth the paper they were written on.”

Rives said the ED did not provide adequate notice or explanation of the change and applied the changes retroactively without statutory authorization to do so. Secretary of Education John B. King Jr. is also named as a defendant in the suit, which was filed in the U.S. District Court for the District of Columbia. The ABA is asking the court to recognize that it is a “public-service organization” that employs individuals in “public-service jobs” for the purposes of the PSLF, vacate the Department of Education’s retroactive interpretation of plaintiff eligibility, and reinstate the previous eligibility parameters.

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