The Department of Education had tried to retroactively strip ABA members of their right to apply for public service loan forgiveness programs.
The Department of Education has settled a lawsuit filed by the American Bar Association, which spent years arguing that its employees should be eligible for forgiveness on their student loans.
The settlement, reports Forbes.com, agreed with an earlier judgment against the Department of Education. In both, the courts determined that neither the federal government nor its appendages can retroactively change rules concerning eligibility for public service loan forgiveness programs.
Under such programs’ purview, eligible individuals can receive a permanent reprieve from student debt. To qualify, applicants must have made at least 120 loan payments while working full-time in a public service position.
Since 2012, the Department of Education has been providing prospective applicants with an Employment Certification Form, or ECF, which would allow loan-borrowers to determine, independently, whether their job and payment history would entitle them to loan forgiveness.
But in 2016, the department informed the American Bar Association and its employees that the ABA no longer qualified for public service exemptions.
The ABA and four of its employees filed a complaint against the government. Of those four employees, three had obtained ECFs which confirmed their eligibility for loan forgiveness. But the Department of Education’s retroactive decision rendered their ECFs effectively worthless, right alongside years of payment and employment history.
In their complaint, the ABA employees said they worked for a non-profit employer—the American Bar Association—which provides public interest legal services. Their careers, says Forbes.com, “include improving public defender systems and providing legal services to disabled veterans and unaccompanied immigrant minors.”
The Department of Education, though, justified its decision by saying that ABA was no longer a qualifying organization because its primary purpose had shifted from public service.
But that rationale didn’t cut it for the court. After all, many ABA employees had decided to pursue employment with the organization precisely because it afforded them an opportunity to wash away outstanding student debt.
In a February 2019 ruling, U.S. District Judge Timothy J. Kelly condemned the department for acting “arbitrarily and capriciously” in suddenly changing its interpretation of public service loan forgiveness regulations. And, of course, the department’s about-face had “an immediate and significant impact on [borrowers’] ability to plan their careers and finances.”
The department, wrote Kelly, failed to “display awareness of its changing position, provide reasoned analysis for that decision, and take into account any serious reliance interests affected.”
Kelly issued a summary judgment in favor of three of the four employees; he also vacated the government’s retroactive dismissal of loan forgiveness standards.
Kelly’s ruling, writes The Washington Post, provided an impetus for Education to settle.
As part of its agreement, the Department of Education will not only honor its loan forgiveness promise but continue to list the American Bar Association as a qualifying employer.