The Public Service Loan Forgiveness (PSLF) program is a United States government program that was created under the College Cost Reduction and Access Act of 2007 signed into law by President George W. Bush to provide indebted professionals a way out of their federal student loan debt burden by working full-time in public service.
The Department of Education reported that 2,215 borrowers had the remainder of their respective student loans forgiven under the program as of April 30, 2020 for a denial rate of 98.5%.
[7] The earliest date that public servants could qualify for full cancelation of their loans was October 1, 2017, ten years after PSLF existed.
In March 2018 Congress attempted to fix PSLF by passing the Temporary Expanded Public Service Loan Forgiveness program (TEPSLF).
[9] These denials are the result of many problems, including servicers who provided false or misleading information about whether an account had the right loan type and payment plan to qualify for PSLF.
[17][18] A recent GAO report found that the cost of loan forgiveness has been underestimated, leading many commentators to speculate that a new Republican administration and Congress will take steps to curb the problem.
[24] In response, the American Bar Association joined four individual plaintiffs who were denied eligibility under PSLF in a lawsuit against the United States Department of Education to stop the department's decision to retroactively refuse to honor loan forgiveness commitments it made to individuals who "have dedicated their careers to public service.
"[25] The ABA argued the Department of Education "substantially changed its policy on PSLF-eligible employers" which directly contradicts statutory procedures for modifying regulations requiring public notice and comment periods.
[26] On February 22, 2019, a New York federal district court found the Department of Education's actions "arbitrary and capricious."
The court found: "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.
[28] Such ruling could lay the groundwork for borrowers who were denied loan forgiveness after being told they were eligible to appeal.
[30] The Education Department further stated that its decision does not restrict the agency from changing the definition of a public service organization in new regulations in the future.