Thousands of officials could have their student loans canceled after lawsuit settles

A settlement in a lawsuit brought against the US Department of Education by the nation’s largest teacher unions could mean thousands of previously dismissed officials will have their cases reconsidered, the Associated Press reported.

The complaint was brought by the American Federation of Teachers (AFT) on behalf of eight members who claimed they were inappropriately dismissed for student loan relief through the Public Service Loan Forgiveness Program . A settlement announced Wednesday seeks to resolve allegations of mismanagement of the flawed program, which the Education Department is separately seeking to revise.

The program is supposed to give college graduates who take up public service jobs a student loan forgiveness after 10 years of monthly payments. Applicants reported being widely rejected for failing to follow complicated eligibility rules.

For more Associated Press reporting, see below.

Thousands of officials who have been kicked out of a student loan cancellation program will have their cases reviewed by the Education Department as part of a new settlement in a lawsuit brought by one of the largest teachers’ unions in the country. Above, pedestrians walk on the Stanford University campus in Stanford, Calif. April 9, 2019.
Jeff Chiu, File / AP Photo

As part of the settlement, the ministry said it would automatically review applications from all borrowers who were rejected by November 1, 2020, provided they have made 10 years of payments. If the ministry believes a rejection was warranted, it will email borrowers to explain the decision and how they can become eligible.

According to the lawsuit, the Education Ministry routinely made errors in processing applications, but offered no appeal process. He argued that the borrowers were unlawfully deprived of their due process rights. The lawsuit targeted the department and former Education Secretary Betsy DeVos.

This goes beyond a temporary extension announced last week, which allows some previously ineligible borrowers to get loan forgiveness if they submit an application by the end of October 2022.

A new appeal process will also be created by April 30, 2022 for anyone whose request is denied. The eight plaintiffs in the lawsuit will also see their loan balances erased, estimated at nearly $ 400,000.

Randi Weingarten, president of AFT, called it a “game-changing victory” for educators, nurses and other public officials who have been wrongly dismissed.

“We just made sure that a promise made is a promise kept,” Weingarten said on a call with reporters. “The settlement untangles the Gordian knot of the botched implementation of the PSLF.”

Kelly Leon, a spokesperson for the department, said the Biden administration is committed to improving the program, which it says has failed on its promises.

“We are delighted to resolve this dispute and look forward to working with organizations including AFT to further improve the PSLF program,” she said in a statement.

Among the plaintiffs is Debbie Baker, a teacher from Oklahoma who made 10 years of payments before learning she had a type of loan that is not eligible under the program’s rules. She will now get over $ 80,000 in student debt written off.

“It changes a life: being able to go to school and teach every day, without having to deal with anxiety and anguish, guilt and the feeling of being simply trapped by debt”, said she told reporters. “It’s really, really life changing.”

Some other complainants said their student loan officers falsely told them they were eligible for the program, only to find out later that they had an ineligible loan or repayment plan. They will also see their loans offset.

The ministry also agreed to send an email to borrowers who may be eligible for loan forgiveness and explain how to submit the correct documents.

The program has been the subject of debate for years amid criticism that it failed to deliver on its promise to officials. It was created to steer more college graduates into jobs that serve the public good but often have low wages. It is open to public servants at all levels and to employees of non-profit groups.

After seeing that most requests were rejected, Congress added $ 700 million to the program and temporarily extended its rules in 2018. But even after this change, only 1% of requests were approved, according to a federal report a year later.

Thousands of applicants were turned down because they had loans under a now defunct program that provided federally backed student loans through banks. These loans are not eligible under the original rules of the program, just like some repayment plans.

Last week, the Education Ministry announced it would temporarily lift some rules to expand eligibility while working on permanent improvements.

Under the amendment, past payments can be counted against the 10 years of required payments, even if they were made on loans or under payment plans that were previously ineligible. Borrowers have until October 30, 2022 for these payments to be accounted for.

The department is lifting the rules by invoking the HEROES Act of 2003, a federal law that allows the agency to waive certain rules in the event of a national emergency. The move has been applauded by Democrats and student advocates, but criticized by Republicans, who say any changes should be made by Congress.

The Biden administration is committed to making permanent improvements through a federal rule-making process. Hearings for this process began last week.

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