Teachers Denied Loan Cancellation Requests Reconsidered Under New Settlement Agreement between the US Department of Education and the American Federation of Teachers.
The ministry has agreed to re-examine on request the application of any borrower who has completed the federal public service loan forgiveness program and that has been refused, and to automatically review all requests from borrowers who have made payments on a loan. direct loan for at least a decade and which were refused. by November 2020. The ministry will also send detailed notices to borrowers who have been re-declined, telling them how many additional payments to make, how to determine which payments will qualify, and who to contact for advice.
Settlement comes a week after the ministry said it would review the civil service loan forgiveness program and write off the debts of tens of thousands of borrowers. The program, which was created in 2007 to cancel student loans for teachers and other workers who have dedicated a decade of their lives to public service, has long been criticized for its confusing, complicated and poorly communicated application process that left the majority of qualified borrowers unable to obtain loan forgiveness.
“This settlement that we have just concluded guarantees that a promise made is a promise kept,” AFT chairman Randi Weingarten told a press conference on Wednesday. âThe agreement, the regulation, unties a Gordian knot in the botched candidacy of the PSLF. â¦ It was worse than the worst maze we’ve ever been through.
The second-largest teachers’ union filed a federal complaint against former US Secretary of Education Betsy DeVos in July 2019, arguing that the Ministry of Education has [public servants] with excessively heavy student debt âdue to processing errors and inaccurate information provided by loan officers. Borrowers were falsely informed that they were on track for a loan forgiveness, only to find out later that they did not meet certain requirements, AFT said.
The civil service loan forgiveness program has been the target of lawsuits, government monitoring reports and a broad NPR investigation for its mismanagement. Borrowers were turned down for small paperwork errors, and people would spend months, if not years, making payments only to find they weren’t entitled to a pardon.
To qualify for loan forgiveness, borrowers had to follow an income-based repayment plan with a federal direct loan. They had to make 120 monthly loan payments, and those payments had to be made on time. There was so much paperwork that less than 2% of program applicants received relief, according to AFT.
The ministry announced last week that it would temporarily waive many of these requirements and do so retroactively. These changes will mean that around 22,000 people are eligible for automatic loan cancellation, and another 27,000 borrowers could have their debts canceled if they can prove they have already made payments while working in the civil service. , according to the ministry.
In a statement, spokeswoman Kelly Leon said the department was “happy to settle this dispute” and looks forward to working with groups like AFT to “further improve the PSLF program.”
“For too long, the civil service loan forgiveness has failed to deliver on its promise of debt relief to public service workers in our country,” she said. “The Biden-Harris administration takes this promise seriously and is already making the changes necessary to remove the burden of student debt from those who serve our communities and our country.”
Ministry to Cancel Applicant Loan Balances
Weingarten said the regulations will give “muscle and bite” to the changes announced by the Education Department last week by establishing a clear review process. She also criticized DeVos and the previous administration, saying DeVos could have made these bureaucratic changes to ease borrowers, but “instead of fixing it, she filed motion after motion to dismiss this lawsuit.”
Under DeVos, the ministry announced it would simplify the amount of paperwork had to go through the loan cancellation process – a change Weingarten at the time called “a bandage that does little to heal a gaping wound.”
Through the settlement, the ministry also wrote off remaining loan balances for the eight AFT members who registered as plaintiffs in the case, totaling about $ 400,000 in debt.
Plaintiff Debbie Baker, a choir teacher in Tulsa, Oklahoma, will have over $ 80,000 in canceled loans. During a press call, she cried as she remembered receiving incorrect information from her loan officer for years, which earned her thousands of dollars in interest and fees. Baker contacted “anyone who wanted to listen,” she said, “and I quickly realized nobody cared and I was just a little fish in a really big pond.”
“It just changes your life to be able to go to school, to teach every day and not have to deal with the anxiety, dread and guilt of being trapped in debt.” Baker said.
In 2018, AFT also initiated a class action lawsuit against Navient, one of the largest federal student loan services, with nine teachers who alleged that the provider provided borrowers with “inaccurate and misleading information” for financial gain. Navient recently announced plans to exit the government-owned student loan business, although the Ministry of Education has extended his contract until September 2023.
Navient and AFT agreed to settle the dispute last year, but class-action opponents have since appealed the deal. Navient and AFT are fighting the appeal, but Weingarten said on the appeal that she is confident AFT will win this settlement as well.