Dept. of Education, DeVos Mismanaged Public Service Loan Forgiveness Program, Class Action Claims

New to ClassAction.org? Read our Newswire Disclaimer

A former public school teacher in Utah has filed a proposed class action against the U.S. Department of Education and Secretary of Education Betsy DeVos over the alleged mismanagement of the Public Service Loan Forgiveness (PSLF) Program.

Established in September 2007, the PSLF Program, the case explains, was designed to grant student loan forgiveness to those who make 120 qualifying payments while employed in public service positions, such as teachers, firefighters, police officers and nurses. The lawsuit argues that the Department of Education and DeVos have failed to administer the program the way Congress intended and have denied loan forgiveness to qualified borrowers “on arbitrary and capricious grounds, without any meaningful process to review erroneous decisions.”

According to the lawsuit, the Department of Education’s administrative process for handling PSLF applications is “practically nonexistent.” For instance, borrowers are allegedly given no avenue to challenge the Department’s mistakes on “such routine matters as counting the number of qualifying payments,” the case alleges, nor are they provided with a “meaningful explanation” of the Department’s rejections of their PSLF applications.

The plaintiff, a retired public school teacher who says she applied for loan forgiveness in 2014 after making 120 qualifying payments, was allegedly told that she was ineligible for the PSLF Program due to “inconsistent payments” and “loan types.” The Department of Education, according to the suit, refused to provide a “precise reason” for its denial of loan forgiveness.

Citing the DOE’s own reports, the case notes that the Department has forgiven the loans of fewer than 520 public servants—which reportedly adds up to fewer than one percent of PSLF applicants as of March 2019.

Echoing claims of a now-trimmed lawsuit filed against Navient Corporation in October 2018, the lawsuit also alleges the defendants have further barred public servants from obtaining loan forgiveness by failing to ensure that loan servicers “provide accurate guidance” to borrowers regarding their eligibility for the PSLF Program. The previous lawsuit, which had all but one of its claims dismissed, alleged student loan servicer Navient unlawfully steered borrowers away from the PSLF program and toward less cost-effective repayment options.

DeVos and the Department of Education were named as defendants in a prior case filed in late June 2019 in which the plaintiff argued that the parties have failed to process borrower defense applications for student loan forgiveness based on a for-profit school’s misconduct.

The full complaint for this lawsuit can be read below.