Will the Public Service Loan Forgiveness program fail its applicants?

A program that was presented as an opportunity to help compassionate professionals enter the public sector in exchange for loan forgiveness may not live up to its promises.

The Public Service Loan Forgiveness (PSLF) program was perceived as a way to encourage talented individuals to use their skills to help the less fortunate. The program allowed compassionate professionals to take positions that they would otherwise be unable to afford. These individuals were often entering the job market with thousands or even hundreds of thousands of debt due to student loans. The program offered a sort of reward for choosing to help others instead of choosing another job in the private sector that likely offered a much higher salary.

For many, the loans that help fund the training for these jobs are likely unmanageable on the salary offered in the public sector. In exchange for taking a lower wage, the PSLF would forgive a large portion of the individual's student loan debt.

How did applicants take part in this program?

Certain qualifications were required to take part in the program. Namely, the applicant had to have a qualifying job, remain in a qualifying position for 10 years and make 120 on-time payments to the loan.

The first batch of applicants to this program is coming up on the end of their 10 year period. Those who made their on-time payments are now expecting the Education Department to hold up its end of the deal.

Will the Education Department forgive loans as promised?

The United States Education Department recently started dropping applicants that are coming up to their 10 year mark from the program. The American Bar Association (ABA), a group that represents legal professionals throughout the country, is fighting these dismissals. The group filed a lawsuit against the agency. In response, the Education Department filed a motion for summary judgment stating that the ABAs legal action is premature. The agency contends that the applicants did not receive full approval into the program at the time of application. Instead, the agency argues that the application is not fully reviewed until the applicant completes his or her ten years of service. At that time, the application will be reviewed and admittance to the program determined.

The potential to lose out on promised loan forgiveness will impact thousands of young people. Professionals like teachers, engineers, lawyers and doctors made major life decisions based on these promises. Now, the agency appears to state that meeting the requirements outlined at the beginning of the program, requirements that guided ten years of the applicant's life decisions, may not be enough.

What options will applicants have if their loans are not forgiven?

The fate of this program is not yet known. Although this piece only discusses one legal challenge to the Education Department's failure to provide forgiveness, there will likely be more. It will be interesting to watch how the courts hold on the legal issues found in these challenges.

Although the fate of this program is not yet known, anyone that is struggling with student loan debt has options. Although generally not dischargeable through bankruptcy, other forms of debt may be eligible for relief. This could free up funds to pay off student loans and lead to a fresh financial start.

Those who are frustrated with their student loans and struggling to make ends meet are wise to seek legal counsel. Your attorney will review your situation and discuss which legal options are available that can offer relief.