Title : STUDENT DEBT UPDATE: A WIN FOR STUDENTS
link : STUDENT DEBT UPDATE: A WIN FOR STUDENTS
STUDENT DEBT UPDATE: A WIN FOR STUDENTS
3 Borrowers Win Case on Eligibility for Public Service Loan Forgiveness
By: Ron Lieber
The New York Times
23 February 2019
Three student loan borrowers scored a major victory against the Department of Education on Friday, when a federal judge laid the groundwork for a reversal of the department’s determination that their employers were not eligible for the government’s public service loan forgiveness program.
In doing so, Judge Timothy J. Kelly, of the Federal District Court for the District of Columbia, declared one of the department’s main legal arguments to be “nonsense.”
Borrowers seeking to get their loans forgiven under the public service loan forgiveness program must have the right type of federal loan, make 120 on-time payments, enroll in the correct category of repayment plans and work for an eligible public-service employer.
The legal dispute, which involved four public-interest lawyers who themselves filed suit, was over what kind of employer is eligible.
Because about 25 percent of all federal student-loan borrowers end up working in public service, some cases were bound to emerge in the wake of the 2007 law that created the loan-forgiveness program. Several years after the law passed, the Education Department created employment certification forms that borrowers could use throughout their 120 months of repayment to try to head off any confusion about eligibility.
In the case of the borrowers who filed suit, the department had indicated in a variety of ways (including through letters approving the borrowers’ forms) that the plaintiffs were working for eligible employers. Then, however, the department changed its mind and made its decision retroactive, rendering years of payments ineligible toward the 120-month count.
When that happened, it threw the plaintiffs’ personal finances into chaos. Often, people who qualify for entry into the 120-month loan forgiveness pipeline are in income-based repayment plans that don’t even cover all the interest that accrues each month. As a result, their balances grow over time instead of shrink. Borrowers, though, tend to put their heads down and live with it, knowing that loan forgiveness (which does not come with any income tax liability in this instance) is on the horizon.
In defending itself, the Education Department had argued that a letter stating that an employer was eligible, in response to the submission of an individual’s certification form, “does not reflect a final agency action on the borrower’s qualifications” for loan forgiveness.
In practice, teachers, police officers and other government workers and employees of nonprofit 501(c)3 organizations did not have to worry, since their eligibility was clear in the law. But employees of other types of nonprofit groups were not always certain about the status of their employers.
In this case, the judge began by plainly stating his disagreement with the department’s assertion that the certification response letters to borrowers were not definitive. “The language of the denial letters demonstrates that they marked the department’s final determination,” he wrote, pointing to “definitive” and “unambiguous” language.
The judge also ruled that when it came to the three lawyers who prevailed in this case — Geoffrey Burkhart, Michelle Quintero-Millan and Kate Voigt — the department had changed two of its policies without properly informing borrowers or considering the impact on the borrowers who were relying on its original guidance. One policy determines whether public service is an organization’s “primary purpose,” and the other relates to whether educational services are provided in a “school-like setting.”
“Defendants argue that the denial letters did not have ‘an immediate or significant practical effect’ on the individual plaintiffs because their ‘eligibility for P.S.L.F. had not yet been finally determined,’” the judge wrote. The judge said this was “nonsense,” since the borrowers’ loan balances were spiraling upward and they might have needed to change jobs if their current employment was not eligible for loan forgiveness.
As a result of the ruling, the three borrowers who won the case and all others like them now have grounds to petition the Education Department to have their eligibility reinstated. The department’s press office did not immediately respond to a request for comment.
There was a fourth plaintiff, Jamie Rudert, and he did not get a favorable ruling. His issue involved a different standard: whether his work for paralyzed veterans was at an organization that provides services “outright” and whether that ought to matter. The judge ruled that the “outright standard” was an appropriate reading of the program’s rules and that its use in this instance had not represented any actual policy change.
Chong Park, a lawyer at Ropes & Gray who represented the plaintiffs, said in an interview that he did not agree with the judge’s ruling in the fourth case. He and that client would consider their next steps in the coming days.
NOTE: This is an important win, one that should rein in the more egregious tactics of the Department of Education somewhat although a great deal more needs to be done in this area. Student debt ranks right up there with our wealth gap and the declining fortunes of America's working and middle classes as a public policy issue. Frankly, I am not entirely clear just how as a nation we decided to encumber young people seeking a college education with lifelong crushing debt from student loans but this trend parallels many similar "predatory capitalistic" trends that have infected the country for thirty years now.
In the broader picture, privatization, government distrust, unfettered "market based" legislation, rules and regulations, have been a kind of package approach to the transformation of the American economy from one that provided assistance to pretty much everyone in the post World War II assisting folks to climb differing ladders of success and achieving the American Dream, to one that actively works against the achievement of such worthy goals. It is why the newly elected crop of Democrats - youngsters for the most part who have been the victims of this corrosive trend - are calling for bold proposals to correct these trends.
One data point that reveals just how insidious has been this trend, is the financing of higher education in state sponsored universities. Whether we are talking about the venerable and venerated University of California state university system or those in Wisconsin and New York State, the financing of the operation of these institutions through state tax revenues has fallen from a high of about 30% back in the 1970's to just over 10% today.
Why have we reduced the public funding of these institutions? Privatization, government distrust and free market based economics of course, but there is an even overriding clue that parallels the rise of our great political divide today: the loss the concept of a "public good."
In today's political and social climate no one is responsible for anyone else and ideologically, therefore, there is no such thing as a public benefit paid for by folks who do not benefit directly but are required to subsidize those who do. This is the essence of a "public good" and it's a practice as well as a philosophy that we no longer champion. Thus the resulting magnitude of the $1.5 trillion dollars in student loans owed today and it's just plain wrong.
Take Care Everyone!
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