Because about 25 percent of all federal student-loan borrowers end up working in public service, some cases were bound to emerge in the wake of the 2007 law that created the loan-forgiveness program. Several years after the law passed, the Education Department created employment certification forms that borrowers could use throughout their 120 months of repayment to try to head off any confusion about eligibility.

In the case of the borrowers who filed suit, the department had indicated in a variety of ways (including through letters approving the borrowers’ forms) that the plaintiffs were working for eligible employers. Then, however, the department changed its mind and made its decision retroactive, rendering years of payments ineligible toward the 120-month count.

When that happened, it threw the plaintiffs’ personal finances into chaos. Often, 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 instead of shrink. Borrowers, though, tend to put their heads down and live with it, knowing that loan forgiveness (which does not come with any income tax liability in this instance) is on the horizon.

In defending itself, the Education Department had argued that a letter stating that an employer was eligible, in response to the submission of an individual’s certification form, “does not reflect a final agency action on the borrower’s qualifications” for loan forgiveness.

In practice, teachers, police officers and other government workers and employees of nonprofit 501(c)3 organizations did not have to worry, since their eligibility was clear in the law. But employees of other types of nonprofit groups were not always certain about the status of their employers.