Education Department Casts Doubts On Public Service Loan Forgiveness

A new legal filing by the Education Department last week calls into question the future of the Public Service Loan Forgiveness program, which allowed student loan borrowers to have their loans forgiven after 10 years of work in the public sector.

KELLY MCEVERS, HOST:

If you are a teacher, a firefighter or a social worker, you might already be part of the Public Service Loan Forgiveness program. Since 2007, more than half a million Americans have signed up to have their federal student loan debt forgiven after 10 years of work in public service. But a recent move by the Education Department calls the program's future into question. Let's hear from some people who might be affected by that.

AIMEE CUSTIS: If my service these past seven years doesn't count, when everything's said and done I'll be set back by a decade in my adult life.

JEFF BARNOSKY: And devastating to us and thousands of others who have followed the rules.

MICHAEL LEAVITT: That just almost feels like bait and switch. We made a promise to the government to work in public service, and they made a promise to us.

MCEVERS: That's Michael Leavitt from Huntley, Ill., Aimee Custis from Washington, D.C., and Jeff Barnosky of Princeton, N.J. They are a few of the people who responded to our call-out on social media for experiences with the public service loan forgiveness program. NPR Ed's Anya Kamenetz has been following this story and joins us now. Hi there.

ANYA KAMENETZ, BYLINE: Hi, Kelly.

MCEVERS: So first give us the background on this program, the Public Service Loan Forgiveness program.

KAMENETZ: Sure. So this program was introduced in 2007 by President George W. Bush as a way of easing the burden of student debt for people in the less lucrative public sector. So anyone who works for a nonprofit for the city, state, federal government, as long as you have direct federal student loans, you could make those payments more affordable.

And after 10 years of on-time payment working in the sector, the balance would be forgiven altogether. And we should mention that this could include some employees of NPR. And, in fact, the first group of early birds signed up for the program in 2007, and they would be having their loans erased beginning this fall.

MCEVERS: So what has happened that could throw this program into question?

KAMENETZ: In a nutshell, the Department of Education argued in a recent legal filing that letters sent out certifying people for this program may not in fact be binding. The background of this is that last year, a small group of borrowers learned that their eligibility for the program had been revoked. And this included four people who were all attorneys. And they all worked for organizations like the American Bar Association and Vietnam Veterans of America. And these are sort of like trade associations. They're not exactly 501(c)(3) nonprofit charities. And so their status was actually possibly ambiguous under Public Service Loan Forgiveness.

However, the four argued in a lawsuit that they shouldn't have been revoked after they'd been told that they were going to be in the program. And so the Department of Education technically in this legal filing, it's only responding to this narrow question. You know, is this category of organizations like Vietnam Veterans of America, is that considered public service or not?

But this recent statement about the certification letters was phrased pretty broadly, saying these letters are not final. And so that's making people kind of jumpy. And some people are worried that the new administration may be looking at a way to back up on a program that could be extremely costly. One federal agency estimated that 25 percent of the workforce is in theory eligible for this program.

MCEVERS: At the beginning of this, we heard people who answered our call-out for people who've signed up for the program. What else did you hear from people?

KAMENETZ: Well, we got a tremendous response, Kelly. Some of the key words people had were frightened, anxious, uncertainty and regrets and even betrayed. So we heard from all over the country from teachers, lawyers, librarians, museum educators, even a parole officer in Texas. Aimee Custis, who's - we heard from, deputy director at the Coalition for Smarter Growth which is a nonprofit in D.C. - left us this voice memo.

CUSTIS: I have over $100,000 of debt. So the program has let me take my career into public service in a way I otherwise would have felt was impossible. When I read in the news this week that PSLF certifications were being called into question, oh, my God, my stomach just dropped. It made me feel physically ill.

KAMENETZ: You know, people have really planned their whole lives around this program, not only where to work but also where to live and even whether to get married 'cause this affects your tax status. And so they're very nervous.

MCEVERS: So what happens next?

KAMENETZ: It's important to say that there's no immediate threat to this program for the vast majority of people. If you're in the program, you should keep making your payments. Experts say keep track of your paperwork.

However, the experts I talked to also say it's not out of the question that this program will eventually be scaled back in some way in the future. Even under the Obama administration, there was a proposal to cap that loan forgiveness. But if and when we get to that point, there's bound to be an even greater outcry, of course, from people that were promised otherwise.

MCEVERS: That's Anya Kamenetz of the NPR Ed team. Thank you very much.

KAMENETZ: Thank you.

MCEVERS: We should say we reached out to the Department of Education for comment but did not receive a response by airtime.

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