Dear Commons Community,
The American Federation of Teachers (AFT) and the US Department of Education (USDOE) announced a settlement on the Public Servant Loan Forgiveness(PSLF) program used by my many public service workers.
The AFT hailed the “landmark settlement” in the case of Weingarten v. DeVos — originally filed in July 2019 and titled after the AFT President Randi Weingarten and former Education Secretary Betsy DeVos — as an agreement that will “hold the federal government accountable for its failure to manage the PSLF.”
The news comes a week after the USDOE announced a series of major changes to the troubled PSLF program.
“This agreement unravels the problems of PSLF’s implementation and shows the power of advocacy and collective action,” Weingarten said in a statement, adding: “It represents a game-changing victory for the millions of educators, nurses, public employees, and other AFT members yoked to crushing monthly repayments that have upended their lives. And it gives muscle and teeth to the Education Department’s reforms to PSLF announced last week.”
The PSLF program, created by Congress in 2007, enables government and non-profit employees with federally-backed student loans to apply for forgiveness after proof of 120 monthly payments under a qualifying repayment plan. As reported by Yahoo Finance.
”Yahoo Finance recently detailed the immense difficulties one professor faced while navigating the system over 12 years before ultimately receiving debt cancellation this year.
The embattled PSLF program has yielded an extremely low success rate — in the single digits for years — partly because many borrowers simply did not qualify. In 2018, Congress provided USDOE with $700 million to create the Temporary Expanded Public Service Loan Forgiveness Program (TEPSLF).
As of April 30, 2021, the latest date for which federal data is available, both programs still have anemic outcomes: According to Federal Student Aid, PSLF had an approval rate of 2%. Only 3,458 out of 168,702 completed PSLF forms submitted met the requirements for loan forgiveness. TEPSLF had an approval rate of 3.4%, with only 224 forms out of 6,629 forms meeting the government’s requirements.
Projections by the loan servicer handling the PSLF program also indicated that only 22% of borrowers are on track for forgiveness in the next five years, according to records obtained by the SBPC.
The settlement announced on Wednesday represented “a redemption and redeeming moment for a Department of Education who under the last administration, refused to listen to the people who teach in schools, who nurse in our hospitals, who fight fires,” Weingarten said in a press conference on Wednesday. “It’s clear that elections do matter.”
Addressing the PSLF program is a priority for the Biden administration.
During his nomination hearing in April, James Kvaal, now undersecretary of education (the top official in charge of colleges and universities) said that the administration was looking into PSLF and how to fix it.
In early October, USDOE announced temporary changes to how it was counting qualifying payments and more. The details of those changes can be found here.
Fixing the PSLF program could greatly help recruit more teachers, as school districts struggle to fill positions and as education jobs take a dip (as per the jobs report), former Education Secretary John B. King Jr. told Yahoo Finance Live earlier this week.
“We probably need help from Congress really to make that program as strong as possible,” King said. “There were definitely some bureaucratic hurdles that were created in the design of the program that made it hard for people to access.”
According to King, the previous administration did not consider fixing PSLF as it was not “not something they were interested in supporting, and that led to lots of folks getting rejected who should really have gotten their debt forgiven… the Biden administration is trying to right the ship there. Congress can help as well.”
Settlement’s implications for other PSLF applicants
The settlement reached by the AFT and ED accomplishes several things.
First, it discharges eight individual AFT member plaintiffs’ balances, which totals nearly $400,000.
Second, it allows for an official review of those who had their PSLF applications denied. Those denied applications will be reconsidered.
This will be an automatic review, if their application was denied prior to November 2020, especially if the borrower had at least 10 years of repayment on a direct loan.
Borrowers will receive credit for years of payments made in the past, and also get detailed notices telling them how many payments remain before they qualify for forgiveness, how they can find out which payments are qualifying, and whom to contact to receive guidance about how to obtain loan forgiveness.
On top of that, the settlement also promises to bring more transparency into the system, with publicly available audits of student loan servicer performance, publication of corrective action plans, public releases of data on why borrowers fail to qualify for PSLF, and improved data on turnaround times and outcomes.
Congratulations to Ms. Weingarten and the plaintiffs in this case.