UNITED STATES
A court ruling has given new hope to Public Servants and others denied student loan forgiveness by the United States Education Department.
A Federal District judge ruled in favour of three borrowers who accused the Department of changing an employment requirement for the Public Service Loan Forgiveness Scheme, a program that cancels Federal student debt after 10 years of on-time payments for people who take public sector jobs.
In his ruling, Judge Timothy J. Kelly (pictured) wrote that the Department’s changes were “arbitrary and capricious”.
“In adopting the new standards, the Department failed to display awareness of its changed position, provide a reasoned analysis for that decision and take into account the serious reliance interests affected,” Judge Kelly wrote.
Although the final decision on loan forgiveness is in the hands of the Education Department, the ruling could lay the groundwork for borrowers who were denied loan forgiveness after being told they were eligible to appeal.
Each of the borrowers in the case filed in 2016 had initially been told by FedLoan Servicing, the company overseeing the program, that their work as public interest lawyers qualified for loan forgiveness.
Years later, however, the Education Department said that their employers were no longer eligible and that assurances from FedLoan were worthless.
The Department adopted new standards for whether a not-for-profit organisation qualified as Public Service organisation, without informing the borrowers.
A lawyer who represented plaintiffs, Chong S. Park said the decision provided a ray of hope for individuals working towards, or who had been denied, Public Service Loan Forgiveness.
Spokesperson for the Education Department, Liz Hill said the Department was reviewing the different issues raised by the decision and was consulting with the Department of Justice regarding next steps.
Meanwhile, a coalition of unions and a bipartisan group of members of the House of Representatives have urged a Federal Appeals Court to uphold a ruling that struck down the bulk of President Donald Trump’s trio of Executive Orders making changes to the Federal Public Service system.
The group maintains that provisions on the 2018 Executive Orders that the Government claims merely set “aspirational” goals to save money were actually orders to Agencies to bargain with unions in bad faith by focusing only on their budgets, in violation of Federal law.
Washington, 1 March, 2019
