Department of Education Begins Restoring Loan Payment Credits Under PSLF to ABA Employees and Other Public Interest Employees Following Ropes & Gray Victory in Lawsuit

Ropes & Gray and The American Bar Association (“ABA”) are encouraged by recent developments concerning the administration of the Public Service Loan Forgiveness Program (PSLF). Over the past few days, several ABA employees, including two former ABA employees, have received communications from FedLoan Servicing, which administers PSLF on behalf of the U.S. Department of Education, that state the ABA is an eligible employer under the PSLF and that FedLoan Servicing’s previous determinations otherwise had been an error. These letters follow a February 2019 ruling from U.S. District Judge Timothy J. Kelly that the U.S. Department of Education had acted arbitrarily and capriciously in changing the terms of the PSLF and retroactively stripping PSLF eligibility and loan payment credits from several individuals who have dedicated their careers to public service.

“We are pleased that the Department of Education has decided not to appeal Judge Kelly’s order, and has instead started restoring loan payment credits to affected public servants,” said Ropes & Gray partner Chong S. Park. “The Department is finally doing the right thing and the positive impact this has on our individual plaintiffs -- and other student loan borrowers in similar positions -- is very encouraging.”

 “We are gratified that several affected employees have been notified their work with the American Bar Association qualifies as public service work under PSLF,” ABA Executive Director Jack L. Rives said. “We will continue to work with Ropes & Gray to ensure these and other ABA employees get full credit for their public service work.”

 The ABA and four employees who perform public service, represented by Ropes & Gray, sued the Education Department and the Secretary of Education in December 2016, alleging mismanagement of the PSLF program. The lawsuit detailed how the Department changed eligibility requirements for work that was clearly “public service” after previously approving the same work, and after individuals had made major life decisions based on those prior approvals. The ABA claimed that the Department and its contractor, FedLoan Servicing, hurt employees of some nonprofit groups by initially telling them they qualified for loan forgiveness, then reneging on those commitments years later.

 In addition to the two former ABA employees, the two other individual plaintiffs in this lawsuit also have had their loan payments restored. This includes Kate Voigt, an employee of the American Immigration Lawyers Association, and Jamie Rudert, a former employee of Vietnam Veterans of America. Notably, in Judge Kelly’s February ruling, Mr. Rudert was initially not granted the same relief as the other plaintiffs in the case. The Department’s recent restoration of Mr. Rudert’s loan payment credits reflects its admission that, as with the other plaintiffs, its revocation of his credits and PSLF eligibility was erroneous.

 The PSLF program, enacted in 2007 and signed into law by President George W. Bush, provides incentives for graduates to pursue full-time public service careers. It provides a mechanism to forgive student loan debt balances for borrowers who make timely loan payments for 10 years while working full-time in public service jobs. The program broadly defines public service jobs as those providing “public interest law services,” “public education,” “public service for individuals with disabilities,” and “public service for the elderly,” among a variety of other categories.

The case is titled American Bar Association v. United States Department of Education, case number 1:16-cv-02476 in U.S. District Court for the District of Columbia. The lawsuit can be downloaded here.

Led by Mr. Park, the Ropes & Gray team on the matter also includes litigation associate Adam Safadi.