04/13/2017

Concern Mounting About DOE Loan Forgiveness

The DOE is claiming letters of approval are non-binding

Concern is growing that the Department of Education (DOE) may retroactively refuse to honor loan forgiveness as part of the Public Service Loan Forgiveness program (PSLF) to participants employed by certain nonprofit organizations.

In December 2016, the American Bar Association (ABA) filed a lawsuit against the DOE to stop the department’s retroactive implementation of a test for employer eligibility that does not appear in the statute or regulations. The plaintiffs include lawyers who received certification by the department of their employer qualifying for the program. Years later, the DOE notified the plaintiffs their decision had been reversed. The DOE argued in a legal filing that certain approval letters they have sent in the past are not binding. To read more about this lawsuit, click here.

The PSLF was enacted in 2007 to provide incentive for individuals to enter public service. Under the program, an individual who works for 10 years and makes timely payments will have their loans forgiven.

This may be an issue for human resources departments at nonprofit organizations that have had employees participate in the PSLF program. The DOE is not providing public notice of the change. If your organization or members may be impacted by this, please contact Kenneth Goldsmith, director for state legislation at the American Bar Association, at kenneth.goldsmith@americanbar.org or at (202) 662-1789.

This article was provided to OSAE for reprint from The Power of A.