sunny.png
Monday October 18th, 2021 10:37AM

Borrowers denied student loan relief will get a second look

By The Associated Press
Related Articles
  Contact Editor

Thousands of public servants who were rejected from a student loan forgiveness program will get their cases reviewed by the Education Department as part of a settlement in a lawsuit brought by one of the nation's largest teachers unions.

The settlement announced Wednesday aims to resolve a 2019 suit accusing the department of mismanaging its Public Service Loan Forgiveness program — a troubled initiative that the agency is separately working to fix through an overhaul announced last week.

The suit was brought by the American Federation of Teachers on behalf of eight members who said they were wrongly denied debt cancellation through the program.

Created in 2007, the program promises that college graduates who take jobs in public service can have their federal student debt forgiven after making 10 years of monthly payments. But the vast majority of applicants have been rejected, often for failing to meet complicated eligibility rules.

According to the lawsuit, the Education Department routinely made errors while processing applications yet offered no appeals process. It argued that borrowers were illegally being denied their right to due process. The suit targeted the department and former Education Secretary Betsy DeVos.

As part of the settlement, the department said it will automatically review applications for all borrowers who were rejected prior to Nov. 1, 2020, as long as they had made 10 years of payments. If the department finds that a rejection was justified, it will email borrowers to explain the decision and how they can become eligible.

It goes a step further than a temporary expansion announced last week, which allows some previously ineligible borrowers to get loan forgiveness if they submit an application by the end of October 2022.

A new appeals process also will be created by April 30, 2022, for anyone whose application is denied. All eight plaintiffs in the suit will also get their loan balances erased, estimated at nearly $400,000.

Randi Weingarten, president of the AFT, called it a “game-changing victory" for educators, nurses and other public workers who were wrongly rejected.

“We just ensured that a promise made is a promise kept,” Weingarten said in a call with reporters. “The settlement unravels the Gordian knot of PSLF's botched implementation.”

Kelly Leon, a department spokesperson, said the Biden administration is committed to improving the program, which she said has failed to live up to its promise.

“We are pleased to settle this litigation and look forward to working with organizations including AFT to further improve the PSLF Program,” she said in a statement.

Among the plaintiffs is Debbie Baker, an Oklahoma teacher who made 10 years of payments before learning she had a type of loan that isn’t eligible under the program’s rules. She will now get more than $80,000 in student debt erased.

“This is just lifechanging — to be able to go to school and teach every day, and not have to deal with the anxiety and the anguish and the guilt and the feeling of just being trapped by debt,” she told reporters. “This is truly, truly lifechanging.”

Some other plaintiffs said their student loan servicers incorrectly told them they were eligible for the program, only to find out later that they had an ineligible loan or repayment plan. They also will see their loans cleared.

The department also agreed to email borrowers who may be eligible for loan forgiveness and explain how to submit the right paperwork.

The program has been a subject of debate for years amid criticism that it failed to deliver its promise to public servants. It was created to steer more college graduates into jobs that serve the public good but often have modest pay. It's open to government workers at all levels and employees of nonprofit groups.

After finding that most applications were being rejected, Congress added $700 million to the program and temporarily expanded its rules in 2018. But even after that change, just 1% of applications were approved, according to a federal report a year later.

Thousands of applicants have been denied because they had loans through a now-defunct program that gave federally backed student loans through banks. Those loans are ineligible under the program’s original rules, as are some repayment plans.

Last week, the Education Department announced it will temporarily lift some rules to expand eligibility while it works on permanent improvements.

Under the change, past payments can be counted toward the required 10 years of payments even if they were made on loans or through payment plans that were previously ineligible. Borrowers have until Oct. 30, 2022, to get those payments counted.

The department is lifting the rules by invoking the HEROES Act of 2003, a federal law that allows the agency to waive certain rules during a national emergency. The move was applauded by Democrats and student advocates but blasted by Republicans, who say any changes should be made by Congress.

The Biden administration vowed to make permanent improvements through a federal rulemaking process. Hearings for that process started last week.

  • Associated Categories: Associated Press (AP), AP Online Headlines - Washington, AP Business
© Copyright 2021 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Stocks turn mixed on Wall Street in choppy trading
Stocks turned mixed in afternoon trading on Wall Street as investors review earnings and inflation data
1:18PM ( 10 minutes ago )
William Shatner, TV's Capt. Kirk, blasts into space
Hollywood’s Captain Kirk, 90-year-old William Shatner, has blasted into space and safely returned to Earth in a convergence of science fiction and science reality
1:05PM ( 22 minutes ago )
Russia, WHO differ on when approval will come for Sputnik V
The head of the Russian sovereign fund bankrolling the shot says Russia is ready to provide up to 300 million doses of its Sputnik V vaccine to the U.N.-backed COVAX initiative
1:05PM ( 22 minutes ago )
Associated Press (AP)
Justices seem set to revive marathon bomber's death sentence
The Supreme Court sounds ready to reinstate the death penalty for convicted Boston Marathon bomber Dzhokhar Tsarnaev
12:30PM ( 57 minutes ago )
The Latest: WHO proposes experts to advise on virus origins
The World Health Organization released a proposed list of 25 experts to advise it on the next steps in searching for the origins of the coronavirus after its earlier efforts were slammed for accommodating China, where the first human cases were detected in late 2019
11:59AM ( 1 hour ago )
Neo-fascists exploit 'no-vax' rage, posing dilemma for Italy
Italy is wrestling with how to deal with a neo-fascist party that has violently exploited anger over the government's anti-COVID restrictions
11:09AM ( 2 hours ago )
AP Online Headlines - Washington
Kosovo police clash with ethnic Serbs during smuggling raids
Tensions between Kosovo and Serbia have returned after police in Kosovo clashed with ethnic Serbs during an anti-smuggling operation
12:24PM ( 1 hour ago )
Heating bills set to soar as inflation hits energy prices
With prices surging worldwide for heating oil, natural gas and other fuels, the U.S. government said Wednesday it expects households to see jumps of up to 54% for their heating bills from last winter
12:18PM ( 1 hour ago )
Putin says relations with Biden "working and stable"
Russian President Vladimir Putin says the Kremlin has “constructive” relations with the Biden administration and has voiced hope that mutual interests would eventually help normalize U.S.-Russia ties
12:11PM ( 1 hour ago )
AP Business
Stocks turn mixed on Wall Street in choppy trading
Stocks turned mixed in afternoon trading on Wall Street as investors review earnings and inflation data
1:18PM ( 10 minutes ago )
William Shatner, TV's Capt. Kirk, blasts into space
Hollywood’s Captain Kirk, 90-year-old William Shatner, has blasted into space and safely returned to Earth in a convergence of science fiction and science reality
1:05PM ( 22 minutes ago )
Russia, WHO differ on when approval will come for Sputnik V
The head of the Russian sovereign fund bankrolling the shot says Russia is ready to provide up to 300 million doses of its Sputnik V vaccine to the U.N.-backed COVAX initiative
1:05PM ( 22 minutes ago )
JPMorgan's 3Q profits rise, but low rates weigh on revenue
JPMorgan Chase says profits rose 24% in the third quarter, largely driven by one-time items that boosted its results, as the bank struggled to grow revenues with interest rates at near-zero levels
1:05PM ( 23 minutes ago )
Judge holds DC jail officials in contempt in 1/6 riot case
A federal judge has held the director of the District of Columbia’s Depart of Corrections and the warden of the city’s jail in contempt of court
1:05PM ( 23 minutes ago )