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Feds warn cops, firemen and teachers: There’s no guarantee on student loan forgiveness

The latest in a legal battle over Public Service Loan Forgiveness

Public servants who’ve been told they’re eligible for a federal student loan forgiveness program have no guarantee that their debt will be wiped away, the Department of Education reiterated in a legal brief this week.

The brief, filed late Wednesday night, is part of a legal battle between four student loan borrowers, the American Bar Association and the government over the Public Service Loan Forgiveness Program (PSLF), an initiative that allows borrowers doing nonprofit or government work to have their federal student loans forgiven after at least 10 years of payments.

Teachers, social workers and others interested in taking advantage of PSLF often organize their entire financial lives and careers around the program. The only way for them to know whether they’re on track for forgiveness is to file a document known as an employment certification form, or ECF.

Borrowers file the ECF form with their servicer over the course of their 10 years of work to determine whether they’re on track for forgiveness. The plaintiffs allege that — after receiving forms indicating they qualified and were on track for forgiveness — the government improperly reversed course. In the brief filed Wednesday, lawyers for the Department write that the ECF forms were only an initial determination and that borrowers shouldn’t rely on the form as a guarantee their loans will be forgiven after 10 years of payments.

The Department’s attorneys argue in the brief that though it’s “unfortunate” that the borrowers relied on the initial determination they received in response to their ECF forms, it wasn’t a legally binding final determination from the agency. The Department didn’t immediately respond to comment beyond the brief.

That’s part of what makes the Department’s argument so distressing, said Chong Park, a partner at Ropes & Gray who is representing the borrowers, describing the Department’s attitude towards the borrowers as “cavalier.”

“The Department itself created a program, the plaintiffs relied on it,” he said. “They followed the process. Years later, the Department just pulled the rug out from underneath them.”

Jamie Rudert, one of the plaintiffs in the case, said the existence of the program was key in determining his career trajectory after law school. He knew he had an interest in public service, but could only make a job in the field work financially if he found some way to make the $134,808 in student loans he graduated from law school with more manageable.

So Rudert, 35, picked a job that, based on his research, would qualify for PSLF, representing veterans at Vietnam Veterans of America. His ECF forms were approve twice, but when he sent in an ECF form the third time, he was rejected and told that the roughly three years of payments he believed he had made under the program didn’t count either.

“It just adds to this level of uncertainty I have as to whether I made the right decision to go into public service to begin with and to rely on it,” he said.

The Department’s attitude toward the ECF forms — combined with the agency’s proposal to eliminate the program completely — may be discouraging people from pursuing public service, said Natalia Abrams, the executive director of Student Debt Crisis, a borrower advocacy organization. “You’re asking borrowers to enter into a 10 year program without any guarantees,” she said.

The PSLF program, which was established in 2007, faces a major test later this year when borrowers will become eligible for forgiveness for the first time. The brief adds to the uncertainty plaguing the program over the past several months, as Trump administration officials have indicated they’d like to curtail or eliminate it.

Still, borrowers shouldn’t panic about the Department’s argument that the ECF form isn’t a guarantee of forgiveness, said Isaac Bowers, the director of law school engagement and advocacy at Equal Justice Works, an organization that promotes public interest law. seems unlikely that the majority of borrowers who have submitted them — those who work for the government or for 501(c)3 nonprofits — will have their eligibility reneged, he said. Those types of jobs are clearly written into the statute governing the program, he noted.

However, the situation is less clear for borrowers who are part of the lawsuit and worked for other types of nonprofits. “There are definitely ways to improve the program and creating greater certainty for borrowers would be great, but the rescinding of these decisions by the Department of Education is only going to affect a small number of borrowers,” he said.

The bigger threat to the bulk of public servants relying on the program are proposals to fundamentally alter the program, according to Bowers. “Every borrower could potentially be impacted by the elimination of the program or the capping of the program and that is being seriously considered by Congress,” he said.

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