Updated
American Federation of Teachers President Randi Weingarten is suing U.S. Secretary of Education Betsy DeVos, arguing that she has “done nothing to remedy the gross mismanagement” of a federal loan forgiveness program.
The lawsuit, filed today in federal court, represents eight AFT members who say they were unable to receive loan forgiveness due to administrative errors and inaccurate information provided by loan servicers.
The Public Service Loan Forgiveness program, which began accepting applications in 2017, erases student debt for certain classes of public-service workers, including teachers, after borrowers make 120 monthly payments toward their loans over the course of a decade or longer. But qualifications for the forgiveness program are complex, and according to U.S. Department of Education data, as of March, only 518 applicants out of 73,554 who applied were approved.
In the suit filed today, the AFT alleges that the education department under DeVos has “saddled [public servants] with exceedingly burdensome student debt” through processing errors and by allowing misdirection from servicers.
Gloria Nolan, who works in an education-related nonprofit in Missouri, said on a press call that after years of making payments on her loans, she realized she was on the wrong payment plan and had received incorrect information from her loan servicer. She switched her payment plan and continued making payments for years before applying for loan forgiveness. Her application was denied, and the suit alleges that Nolan has not received an explanation from the department.
“I really became frustrated with the process, with Betsy DeVos, with the Department of Education, and everyone who had something to do with it, because there was no accountability,” she said. “I was being held accountable, but there was no accountability elsewhere.”
Nolan said she was a first-generation college student, and she didn’t have any financial background or family assistance. She said she had been told that she could achieve the American dream if she just pulled herself up by her bootstraps.
“This process is setting those boots in cement,” she said. “It’s just not fair. It’s not right.”
Seeking Immediate Loan Forgiveness
Weingarten said on the call that they are seeking immediate loan forgiveness for the plaintiffs, along with a court order requiring the department to identify and fix the errors in its application process.
One plaintiff, Cynthia Miller, is a teacher in Chicago who applied for loan forgiveness last year after making at least 120 qualifying payments. That set off more than a year of back-and-forth with agents at the department, who gave her conflicting information and ultimately denied her application. When she asked for an explanation, she received a letter containing more than 160 pages of dense numerical code and undefined abbreviations, the suit alleges. Miller has continued to seek answers about her case.
Another plaintiff, Janelle Menzel, is a teacher in Minnesota who asked her loan servicer, Nelnet, about the federal Teacher Loan Forgiveness program, which forgives a portion of student loans for teachers working in low-income schools for five years. Menzel was eligible for the program, the suit alleges, but Nelnet told her she was not. The suit also alleges that Nelnet misrepresented the payment process—leading to Menzel making payments for five years that were not counted toward Public Service Loan Forgiveness eligibility.
(The payments went toward the Teacher Loan Forgiveness award, but the suit alleges that if Nelnet had provided the correct information from the start, Menzel would have applied for Teacher Loan Forgiveness earlier or chosen to forgo it entirely in order to qualify for Public Service Loan Forgiveness sooner.)
Ultimately, the department denied Menzel’s application for Public Service Loan Forgiveness. The AFT suit argues that the department’s “denial of Ms. Menzel’s application for loan forgiveness is arbitrary and capricious in that it fails to take into account the Title IV servicer’s misrepresentation.”
“Public Service Loan Forgiveness is a right, but Betsy DeVos has turned it into a crapshoot,” Weingarten said in a statement. “While DeVos dithers, millions of public service workers miss car payments, sink deeper into credit card debt and struggle to care for sick relatives. This deliberate sabotage of a bipartisan government initiative cannot be allowed to stand.”
In an email, department spokeswoman Liz Hill said the department does not comment on pending litigation, but it “is faithfully administering the complex program Congress passed.”
Meanwhile, the department has recently changed its rules to forgive the unfair federal loan debt of thousands of teachers. Under the TEACH grant program, many teachers had seen their grants turned into loans.
In October, the AFT brought forth a separate class-action lawsuit against Navient, one of the largest federal student loan servicers, from nine teachers who alleged that the provider gave borrowers “inaccurate and misleading information” for financial gain. If a borrower is accepted to the federal forgiveness program, the loan is transferred to FedLoan, and Navient no longer receives servicing fees. Earlier this week, a federal judge allowed the lawsuit to go forward under New York state consumer protection law.
Update, 7/11: This post was updated with a response from the education department, and with more details from plaintiffs.
Photo: American Federation of Teachers President Randi Weingarten (Cliff Owen for the Associated Press)