logo
book Subscribe to our Magazine
    • Magazine
    • Membership
    • Donate
  • Racial Justice
  • Economic Justice
  • Climate Justice
  • Health Justice
  • Leadership
    • Grassroots Fundraising Journal
  • CONTENT TYPES
  • Podcasts
    • Tiny Spark
    • Women of Color in Power
  • Webinars
    • Free Webinars
    • Premium On-Demand Webinars
  • Membership

Federal Judge Defines Scope of Public Service Loan Forgiveness Program

Steve Dubb
February 26, 2019
Share
Tweet
Share
Email
Print

February 23, 2019; New York Times

As regular NPQ readers will recall, NPQ has been tracking the status of the Public Service Loan Forgiveness (PSLF) program, a program that seeks to ensure that high college tuition and the resulting student loan debt burden does not inadvertently depress the number of young adults choosing to enter lower paying government and nonprofit jobs. Launched in 2007, the program enables people working in those sectors for a decade and making regular minimal loan payments to have their remaining debt written off after 10 years.

One political advantage of setting a 10-year period was that in 2007, the initial 10-year scoring (cost estimate) was zero. Of course, we’re now at year 12, and the bills are coming due, leading to a host of problems. For example, there’s the need to determine what counts as a qualifying nonprofit: If you’re a 501c3, you’re safe; if you’re another kind of nonprofit, it depends. Which brings us to the case in question here.

Nearly two years ago, four public-interest lawyers—Michelle Quintero-Millan, Geoffrey Burkhart, Kate Voigt, and Jamie Rudert—filed suit on their own behalf to defend their access to the PSLF program. As Michael Wyland wrote in NPQ in April 2017, the crux of the suit is that the former law students have claimed “that FedLoan Servicing, which administers the program for the Education Department, issued approval letters that were then rescinded with little or no opportunity to appeal the decision.”

As NPQ has noted, broader challenges are also affecting the PSLF program. A 2018 US Government Accountability Office (GAO) report found that of the over 19,000 who completed the 10-year requirement, only 55 had their debt forgiven. Meanwhile, there are a total 890,000 people who have had their requests for inclusion in the PSLF program approved—meaning that the pipeline is likely to grow over time.

Last Friday, Judge Timothy J. Kelly of the Federal District Court for the District of Columbia ruled on behalf of three of the four student loan borrowers: Quintero-Millan, Burkhart, and Voigt. However, Rudert was not so lucky. The first three plaintiffs worked for 501c6 legal organizations, while Rudert worked for a 501c19 veterans association.

Sign up for our free newsletter

Subscribe to the NPQ newsletter to have our top stories delivered directly to your inbox.

By signing up, you agree to our privacy policy and terms of use, and to receive messages from NPQ and our partners.

Under the federal Public Service Loan Forgiveness program, implemented in 2007, “Borrowers seeking to get their loans forgiven…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.”

This, however, creates high stakes. Ron Lieber of the New York Times notes that, “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 rather than shrinking.”

For example, say you had been told your job qualified for student loan forgiveness. As a result, you plan minimum payments, since you expect all of your debt to get waived. But then, it isn’t. The effect can be devastating. For instance, as Kelly pointed out in his ruling, “Quintero-Millan’s total federal student debt has increased from approximately $340,000 when she entered repayment to $430,446.48 as of May 2017.”

For its part, the US Education Department argued in court “that the denial letters did not have ‘an immediate or significant practical effect’ on the individual plaintiffs because their ‘eligibility for PSLF’ had not yet been finally determined,’” Kelly noted that 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.”

Fortunately for Quintero-Millan, Burkhart, and Voigt, the Court ruled, as Lieber explains, that the US Education Department retroactively “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’.” This, the Court said, you cannot do.

As a result of the ruling, the three borrowers who won the case and all others like them now have grounds to petition the US Education Department to have their eligibility reinstated. (The department’s press office did not immediately respond to a request for comment from the Times.) The issue with Rudert, the fourth plaintiff, involved a different standard: whether his work for paralyzed veterans was at an organization that provides services “outright,” and whether that ought to matter. Kelly 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 all the plaintiffs, said he and Rudert would consider their next steps in the coming days.—Steve Dubb

Share
Tweet
Share
Email
Print
ABOUT THE AUTHOR
Steve Dubb

Steve Dubb is a senior editor at NPQ, where he directs NPQ’s economic justice program, including NPQ’s Economy Remix column. Steve has worked with cooperatives and nonprofits for over two decades, including twelve years at The Democracy Collaborative and three years as executive director of NASCO (North American Students of Cooperation). In his work, Steve has authored, co-authored and edited numerous reports; participated in and facilitated learning cohorts; designed community building strategies; and helped build the field of community wealth building. Steve is the lead author of Building Wealth: The Asset-Based Approach to Solving Social and Economic Problems (Aspen 2005) and coauthor (with Rita Hodges) of The Road Half Traveled: University Engagement at a Crossroads, published by MSU Press in 2012. In 2016, Steve curated and authored Conversations on Community Wealth Building, a collection of interviews of community builders that Steve had conducted over the previous decade.

More about: loan forgivenessNonprofit NewsPolicystudent debtstudent loan reform

Become a member

Support independent journalism and knowledge creation for civil society. Become a member of Nonprofit Quarterly.

Members receive unlimited access to our archived and upcoming digital content. NPQ is the leading journal in the nonprofit sector written by social change experts. Gain access to our exclusive library of online courses led by thought leaders and educators providing contextualized information to help nonprofit practitioners make sense of changing conditions and improve infra-structure in their organizations.

Join Today
logo logo logo logo logo
See comments

NPQ_Spring_2022

You might also like
Edgar Cahn’s Second Act: Time Banking and the Return of Mutual Aid
Steve Dubb
We Owe You Nothing: The Movement to Cancel Student Debt Gains Ground
Rithika Ramamurthy
Charitable Tax Reform: Why Half Measures Won’t Curb Plutocracy
Alan Davis
Green New Deal or Stale Old Tax-Break Scam? Getting Electric Vehicle Incentives Right
Greg LeRoy
Goodbye “Race Neutrality”—The Case for Race-Conscious Economic Policy
Dedrick Asante-Muhammad
Graduate Student Workers Are in the Frontline of the Growing Labor Movement
Rithika Ramamurthy

Upcoming Webinars

Group Created with Sketch.
June 9th, 2 pm ET

Remaking the Economy

Wage Justice, Now!

Register
You might also like
Edgar Cahn’s Second Act: Time Banking and the Return of...
Steve Dubb
We Owe You Nothing: The Movement to Cancel Student Debt...
Rithika Ramamurthy
Charitable Tax Reform: Why Half Measures Won’t Curb...
Alan Davis
WOMEN OF COLOR IN POWER
Women of Color in Power

Listen wherever you get your podcasts.

Subscribe
Rep. Ayanna Pressley and Authentic Leadership
Reclaiming Interrupted Lineages

Like what you see?

Subscribe to the NPQ newsletter to have our top stories delivered directly to your inbox.

By signing up, you agree to our privacy policy and terms of use, and to receive messages from NPQ and our partners.

Independent & in your mailbox.

Subscribe today and get a full year of NPQ for just $59.

subscribe
  • About
  • Contact
  • Submissions
  • Advertisers
  • Newsletters
  • Copyright

Subscribe to View Webinars

We are using cookies to give you the best experience on our website.

 

Non Profit News | Nonprofit Quarterly
Powered by  GDPR Cookie Compliance
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.

Strictly Necessary Cookies

Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.

If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.