Teachers union files lawsuit against Betsy DeVos over loan forgiveness program

The American Federation of Teachers union sued Education Secretary Betsy DeVos Thursday, alleging the department has mismanaged a federal program that grants teachers and other public service workers loan forgiveness after they make 10 years of payments.

About 1% of the more than 73,000 borrowers who have applied for the Public Service Loan Forgiveness program have been granted relief since the program was created in 2007, according to department data.

The lawsuit blames the Department of Education for denying applicants “on arbitrary and capricious grounds” and failing to put a process in place to review erroneous decisions or ensure loan servicing companies provide accurate guidance to borrowers about their eligibility.

“Instead of helping the millions of Americans owed debt relief under the Public Service Loan Forgiveness program, DeVos has hurt and pauperized them. And instead of working with lawmakers to improve the program that millions of teachers, firefighters, nurses and first responders deserve, DeVos has vandalized it,” said Randi Weingarten, president of the American Federation of Teachers, in a statement.

A spokeswoman for the Department of Education declined to comment on pending litigation.

The Public Service Loan Forgiveness program was meant to encourage people with student debt to stay in lower-paying jobs that serve the public. Teachers, social workers, public defenders and physicians are among those who can qualify. They must work for an eligible non-profit or government employer, as well as have the right kind of federal student loan and be enrolled in a specific type of repayment plan.

Eight educators are also named in the complaint, which seeks loan forgiveness in their specific cases. It also asks the department to fix the application process and come up with an appeals process.

After paying down her debt for 10 years, Kelly Finlaw, an art teacher at a New York public school, applied for forgiveness in 2017. At that point, she was told one of her loans was not eligible and that she would have to start over, Finlaw said on a call with reporters. The same thing happened to another plaintiff, Oklahoma music teacher Debbie Baker. The lawsuit claims her loan servicer incorrectly told her she would qualify.

Chicago public school teacher Cynthia Miller alleges in the complaint that she was denied forgiveness because her loan payments were miscounted.

Many borrowers have complained that the program’s rules are hard to navigate, and some have found out they don’t qualify only after the 10 years is up. About half of the applicants that have been rejected did not have enough qualifying payments, while a quarter had missing information, and 16% didn’t have eligible loans, according to department data.

DeVos has blamed Congress for creating a confusing program, but some Democratic lawmakers have accused the department of holding up the process.

The American Federation of Teachers previously sued the loan servicing company Navient over problems with the Public Service Loan Forgiveness Program, and other borrowers have filed lawsuits against the company and other servicers.

But the new lawsuit is different, putting blame on the Department of Education.

DeVos has proposed ending Public Service Loan Forgiveness for three years in a row in the budget request she makes to Congress, but lawmakers have continued to fund the program.

Last year, Congress set aside an additional $350 million to fix what they called a “glitch” in the enrollment process.

Some Democrats have proposed further expanding the program. A bill introduced in April by Virginia Sen. Tim Kaine and presidential hopeful and New York Sen. Kirsten Gillibrand would erase half of a borrowers’ debt after making five years of payments and forgive the remaining after 10 years.

Several other Democratic presidential candidates cosponsored the bill, including Sens. Michael Bennet of Colorado, Cory Booker of New Jersey, Kamala Harris of California, Amy Klobuchar of Minnesota, Bernie Sanders of Vermont, and Elizabeth Warren of Massachusetts.

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