In 2007, Congress promised college students that if they made payments on their student loans for 10 years, while holding public-service jobs in the government or in fields that provide aid to the poor and disabled, the rest of their loans would be forgiven.
The promise came due in 2017. Since then, according to a lawsuit filed by a teachers union and several borrowers and supported Friday by California and 20 other states, 90,962 former student borrowers have asked the U.S. Department of Education for loan forgiveness, and 845 — less than 1% — have gotten it.
“Hardworking Americans who serve the public in our schools, hospitals, libraries, law enforcement, firefighting and much more are in a financial bind because Secretary (Betsy) DeVos is reneging on the promise made to them,” California Attorney General Xavier Becerra said in a statement accompanying the filing in federal court in Washington, D.C.
The program is called Public Service Loan Forgiveness. Established by a law signed by President George W. Bush in 2007, it applies to borrowers who have worked full-time for 10 years in either the government, public education, “public-interest law services,” or “public service for individuals with disabilities,” and have made all their monthly payments in an approved repayment plan.
“Many of these borrowers passed on higher-paying opportunities to spend their careers in public service,” lawyers for the states, led by North Carolina, said in Friday’s filing. “Now, after millions of Americans have shaped their lives and careers to fit this financial lifeline, virtually all applicants have been denied.”
More than 1 million borrowers, with total debts exceeding $100 billion, have declared their intention to apply for loan forgiveness under the program, the filing said. It said Department of Education records show that nearly two-thirds of them make less than $50,000 a year.
The states’ filing, and the lawsuit filed in July by the American Federation of Teachers, accused the department of steering borrowers into repayment programs that made them ineligible for loan forgiveness, without informing them of the consequences. Because of those and similar errors, the states said, 370,000 borrowers who enrolled in the program were listed last year as not having made any qualifying repayments.
Frequently, the states said, department officials “fail to provide an explanation for why they have denied” loan forgiveness.
The states also cited an earlier court ruling that found the department, under President Barack Obama, had wrongly changed the definition of “public service” and disqualified programs where student borrowers had worked for years.
Lawyers for the Trump administration are seeking dismissal of the suit, arguing that the teachers’ union and its allies were actually making a “programmatic challenge” to the loan forgiveness program itself, and not to the department’s alleged errors. In Friday’s filing, the states’ lawyers said the administration was trying to make itself “completely unaccountable in courts of law.”
The Department of Education did not respond to a request for comment.