Judge Overturns Change to Attorney Student Debt Forgiveness Program

(CN) – The Department of Education’s bait-and-switch reinterpretation of the statutes governing the Public Service Loan Forgiveness program – an initiative to lure law students into practicing law in lower-paying, more altruistic positions for the promise of debt relief – is illegal, a federal judge ruled on Friday.

The American Bar Association joined four debt-addled attorneys to challenge the Education Department late in 2016, during the lame-duck session of the Obama administration.

“Having entered their professions with six figures of educational debt, these individuals chose not to pursue high-paying jobs and to instead serve the public, relying on the department’s promise: Make payments on your federal loans while working in your public service jobs and, after ten years, the Public Service Loan Forgiveness program will forgive your remaining debt,” their 45-page lawsuit stated. 

The ABA and the students sued the agency and then-outgoing Secretary of Education John King in December 2016, claiming that they reneged on their end of the bargain by changing which types of legal jobs qualified for the program.

U.S. District Judge Timothy Kelly agreed with the ABA, finding the agency, and its new head Betsy DeVos, had violated the Administrative Procedure Act.

“Moreover, these changes were arbitrary and capricious because, in adopting the new standards, the Department failed to display awareness of its changed position, provide a reasoned analysis for that decision, and take into account the serious reliance interests,” Kelly wrote in a 54-page opinion.

The judge struck the changed provisions and remanded the denial letters that the agency sent to three attorneys: Michelle Quintero-Millan, who provided legal services to unaccompanied immigrant minors on the U.S.-Mexico border; Geoffrey Burkhart, who works on improving the United States’ public defender systems; and Kate Voigt, who educates the public on immigration issues. 

Ropes and Gray partner Chong Park, representing the ABA and the attorneys, said he was “gratified” by the ruling.

“Part of the reason that the financial well-being of these dedicated public servants has been hanging in the balance for so long is that the Department of Education failed to acknowledge that — without any notice — it changed its interpretation of the relevant regulations,” Park wrote in a statement. “In today’s decision, the court rightly recognized this intransigence. We are carefully considering all our options going forward and it is our hope that the Department will take seriously its responsibility to comply with the law when re-considering the claims of eligibility, for these borrowers and others.”

The Education Department did not respond to a request for comment.

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