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ABA sues Department of Education over loan forgiveness

BALTIMORE — The American Bar Association filed suit this week against the U.S. Department of Education, alleging the department failed to provide a reasonable explanation for why it has decided to refuse to honor loan forgiveness commitments made to attorneys engaged in public interest law and other public service jobs.

The suit names four individual plaintiffs affected by the agency’s decision, all of whom graduated from law school with six-figure student loan debt and took jobs in public service — ranging from serving disabled Vietnam-era veterans to providing legal services to unaccompanied immigrant minors — with the promise that if they made timely loan payments for 10 years, their remaining debt would be forgiven.

Instead, the suit states, the department abruptly changed the eligibility requirement under the Public Service Loan Forgiveness program, or PSLF, so that the plaintiffs and many other graduates are no longer eligible. The program was enacted in 2007 and the denials of eligibility began a few years ago, “in advance of the date that the first set of loans would be forgiven,” the complaint states.

“This new interpretation seriously harms borrowers who have made career, financial, and life choices — many of them irrevocable — in reliance on the availability of loan forgiveness and the Department’s prior certifications of eligibility,” the complaint states.

The change also harms the ABA’s ability to attract and retain employees, the suit claims, because the department told the national bar association earlier this year that it was no longer an eligible employer for the loan forgiveness program. The program was a major attraction to jobseekers, and many ABA employees will “struggle” to continue working at the organization without future loan forgiveness, the suit states.

“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 statement. “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.”

Education Secretary John B. King Jr. is also named as a defendant in the suit, which was filed in U.S. District Court for the District of Columbia on Tuesday.

“We are committed to implementing the Public Service Loan Forgiveness program in accordance with the final regulations as prescribed by statute, which were negotiated in 2008 and finalized in October of that year,” Kelly Lyon, assistant press secretary for the department, said in a statement Tuesday.

According to the lawsuit, the department’s new interpretation of the program’s provisions violates the Administrative Procedure Act because no reasonable interpretation could exclude the plaintiffs’ public interest jobs or employment with the ABA from the scope of “public service jobs” that qualify for loan forgiveness.

In addition, the suit states, the department failed to provide any explanation for its “complete turnaround” or give reasons that would justify reneging on loan forgiveness commitments made to the plaintiffs. The department also lacks the authority to retroactively apply its new interpretation and “purge” borrowers’ past years of public service, the suit states.

Three of the plaintiffs — Geoffrey Burkhart, Jamie Rudert, and Kate Voigt — had received confirmation from the department that they qualified for the program as long as they continued to work full-time in their public interest law jobs and make monthly loan payments. The fourth, Michelle Quintero-Millan, believed she would qualify for loan forgiveness because her work fell under the public service umbrella and because the department had already certified her employer, the ABA’s South Texas Pro Bono Asylum Representative Project, as a qualified employer, according to the lawsuit.

“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,” ABA Executive Director Jack Rives said in a statement. “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.”

The case is American Bar Association et al. v. United States Department of Education, 1:16-cv-02476.