When Geoffrey Burkhart landed a job in the Illinois Office of the State Appellate Defender in 2009, the lawyer wasted little time before enrolling in Public Service Loan Forgiveness, a program that wipes away federal student debt for people in the public sector after they have made 120 qualifying monthly payments, or 10 years’ worth of payments. Each year since then, he has submitted forms certifying his employment, as he made his way from the public defender’s office to the indigent defense team at the American Bar Association.
There were never any hiccups, and Burkhart, 37, made sure to contact the Education Department to verify his eligibility each time he switched jobs. That’s why he was caught off guard when he received a letter from the agency in October saying his $200,000 in student loans were no longer eligible for forgiveness.
“I have a wife who is a public school teacher, I have a kid and another one on the way. If I have $200,000 worth of loans to pay back, it changes things quite a bit,” he said. “What I do is in the public interest by trying to change public defender systems. It feels a little like the rug is being pulled from under me.”
Now Burkhart is one of four plaintiffs involved in a lawsuit filed Tuesday by the American Bar Association accusing the Education Department of inexplicably changing the eligibility requirement for employment that clearly counts as public service after approving the work.
There are three ways to qualify for Public Service Loan Forgiveness: working for a government organization, for tax-exempt groups known as 501(c)(3) nonprofits or for other types of nonprofit organizations, such as public interest law services or public education. Participants must make 120 loan payments through the government’s suite of plans that cap monthly loan payments to a percentage of income and periodically submit an employment certification form. Only payments made after October 2007 are eligible.
The program, enacted in 2007 under President George W. Bush, was designed to encourage college graduates to pursue careers as social workers, teachers, public defenders or doctors in rural areas. It is especially enticing for medical and law students who graduate with six-figure debt and, as a result, has become a recruiting tool. The prospect of the government reversing course on eligibility undermines the programs, said Linda A. Klein, president of the American Bar Association.
Klein said education officials informed the bar association earlier this year that it was no longer an eligible employer for the forgiveness program, nine years into a 10-year program. Before filing suit, the association tried unsuccessfully to resolve the matter with the department.
“This affects the American Bar Association’s ability to hire and retain qualified people to do the kind of work the ABA does to help the public,” she said. “There is a statute, and if the statute is followed, then we’ll have no further complaint.”
For Kate Voigt, a plaintiff in the case, it is a matter of fairness. Voigt, 33, has worked for the American Immigration Lawyers Association for five years, educating the public about issues facing immigrants in the United States. After inquiring about the forgiveness program, she received an email from education officials stating that her job qualified.
They apparently changed their minds in 2014, when Voigt was informed that her work was no longer eligible as a “public education service” because it wasn’t provided in a “school-like setting.” The vague explanation gave little solace, so she filed a Freedom of Information Act request to learn more, only to receive 198 pages of redacted information.
“It’s been really frustrating,” Voigt said. “It’s been difficult to see the Department of Education do such a poor job of implementing the program and stray so far from its intent.”
Education Department spokeswoman Kelly Leon said the agency is “committed to implementing the Public Service Loan Forgiveness program in accordance with the final regulations as prescribed by statute.”
Public Service Loan Forgiveness has become a lightning rod for criticism as the costs of the program have soared. A Government Accountability Office report last year said the typical borrower in the program owes about $70,000, with 1 in 4 on the hook for more than $100,000. About 1.1 million people had submitted employment forms for the program at the end of September, two-thirds of which have preliminary certification, according to the Education Department. Even if a quarter of the people going through the verification process fail to receive forgiveness, the government would still be responsible for canceling billions of dollars in student loans.
The Obama administration has tried to rein in costs by proposing caps on the amount of money that can be forgiven, but Congress has yet to move on that plan. The first wave of forgiveness will take place next year, and many people are anxious to see whether it will be a smooth process, especially those who have spent the past decade hoping that their work in the public sector would lighten their debt load.