CHICAGO – The American Bar Association has sued the federal government, asking the court to order the Department of Education to reinstate a student loan forgiveness program, which the federal agency had rescinded and applied retroactively to lawyers and others who had worked in what they believed had qualified under the terms of the program as "public service" jobs at the ABA and other non-profit membership organizations after graduating college.
According to a press release from the ABA, the Public Service Loan Forgiveness Program (PSLF), which was signed into law by President Bush in 2007, “provides 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.”
The ABA says the program defines those types of jobs 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.”
The plaintiffs in the new lawsuit - identified as Geoffrey Burkhart, Michelle Quintero-Millan, Jamie Rudert and Kate Voigt - are attorneys who took jobs in the public service sector years ago, based on the PSLF’s assurances that the loans would be forgiven in 10 years. Three of the four received written verification that their jobs qualified under the PSLF program.The employer of Michelle Quintero-Millan worked for a non-profit that had qualified for the program, as certified by the Department of Education.
However, the Education Department decided to rewrite the rules, declaring those who worked for so-called membership organizations, designated by the federal tax code as 501(c)6 organizations - distinct from 501(c)3 charitable organizations or other public service groups - no longer qualified to receive the loan forgiveness benefits. And the department applied the ruling retroactively to the onset of the program.
The attorneys in the ABA suit said they were only informed of the decision in 2016 – the 9th year of the 10-year program.
The law firm Ropes & Gray is representing the plaintiffs.
Mark Kantrowitz. an expert on student financial aid, scholarships and student loans, and publisher and vice president of strategy at Cappex.com in suburban Skokie, noted the ABA had been "heavily involved in the design of public service loan forgiveness" in part "to promote public interest law."
"Historically, someone who graduated with six-figure student loan debt from law school was not able to pay the debt," Kantrowitz said.
Kantrowitz said the original intent of the PSLF was to make it possible for people to pursue careers in public interest law, despite the debts.
“It was kind of surprising that the US Department of Education would try to impose this change and also to make it retroactive," he said. "This is not something where you’re receiving up-front loan forgiveness. This is after 10 years, after people have already made career decisions, relying on this to make the debts affordable.”
He opined that numbers are the main reason for the change in the program.
“I think the Obama administration has gotten concerned about the potential costs of public service loan forgiveness, and has adopted changes to try to reduce the number of borrowers who might qualify," he said.
Kantrowitz said he believes the ABA will prevail in this lawsuit.
“I think the US Department of Education is on very shaky legal ground," Kantrowitz said. "If you look at the four plaintiffs, this is clearly public service work.”