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American Federation of Teachers president Randi Weingarten was one of the plaintiffs in the lawsuit.
Chip Somodevilla/Getty Images
The Department of Education has settled a lawsuit filed in 2019 over its failure to properly manage its promise of student loan forgiveness for public employees. The agreement, which the plaintiffs are calling “historic,” further bolsters major reforms coming to the widely ineffective program that were announced last week.
The settlement comes after Randi Weingarten, president of the American Federation of Teachers, and eight individual AFT members sued former secretary of education Betsy DeVos for “gross mismanagement” of the Public Service Loan Forgiveness program. The plaintiffs had struggled to receive relief from their student loans due to inaccurate records of payments, incorrect information provided by loan servicing companies and lack of oversight by the department, alleged the complaint.
All eight individual plaintiffs will have their remaining student loan debt fully discharged, totaling nearly $400,000 in relief.
“This is a redemption and a redeeming moment,” Weingarten said during Wednesday’s announcement. “It is a redemption and redeeming moment for a Department of Education who, under the last administration, refused to listen to the people who teach in schools, who nurse in our hospitals, who fight fires.”
Additionally, as a part of the settlement, the department committed to several reforms to the Public Service Loan Forgiveness program. All borrowers with direct loans who have had their applications for forgiveness denied will be able to undergo a reconsideration process, which will be announced by the department no later than Jan. 31, 2022. The department will also send detailed notices to borrowers to inform them how many payments remain before they qualify for loan forgiveness, which of their payments qualified and which didn’t, and whom they can contact to receive further guidance about achieving loan forgiveness.
The notices will be sent within 90 days of the execution of the agreement, said Lena Konanova, a partner at Selendy & Gay, which represented the plaintiffs. Within that 90-day period, the department will notify borrowers who may be eligible for Public Service Loan Forgiveness or temporary expanded Public Service Loan Forgiveness so that they can submit additional information.
The department committed to automatically reviewing any applications denied prior to November 2020 for borrowers with at least 10 years of repayment on a direct loan. It also will make audits of student loan servicer performance publicly available, release data on why borrowers have failed to qualify for PSLF in the past and improve data on PSLF turnaround times and outcomes so that borrowers know what to expect when applying for relief.
A spokesperson for the department said it was pleased to settle the litigation and will continue working with organizations, including AFT, to improve the PSLF program.
In an announcement Oct. 6, the department said it would offer a limited PSLF waiver until Oct. 31, 2022, that will allow borrowers to count any loan payments that a borrower made while working for a qualified employer toward PSLF, regardless of the type of loan or repayment plan. Typically, only direct loan payments qualify for PSLF, so any payments that borrowers made on Federal Family Education Loans or federal Perkins loans didn’t count toward the 120 payments needed for forgiveness.
Other reforms announced by the department include a review of all applications that have been denied for PSLF, a review of processing practices by the servicer responsible for managing the PSLF program and a temporary reconsideration process for borrowers to request another review of their denied applications. But while most of these changes are limited and temporary, the agreement reached in the settlement is not.
“Though the department’s announced changes from last week are incredibly important, we do recognize that they have certain conditions,” Konanova said. “This [agreement] applies to all borrowers and is not on a date-limited period, and that’s why our settlement provides the muscle behind the promises the department has made over the last week.”
Deborah Baker, a public school teacher from Oklahoma and one of the eight individual plaintiffs, said through tears that she never thought this day would come. Baker had been assured for years by her loan servicer, Navient, that if she continued making on-time payments on her income-driven repayment plan, she would qualify for PSLF. But after nine years of payments, she was told that she should’ve consolidated her loans into direct loans, and her applications for PSLF and TEPSLF were denied.
“This is life changing, to be able to go to school, teach every day and not have to deal with the anxiety and the anguish and the guilt and the feeling of just being trapped by debt,” Baker said.
