Hundreds of thousands of people in the federal student debt forgiveness program are at risk of being stuck with debt they’ve done everything right in trying to handle. The idea of the program is that people who work in public service jobs for 10 years while making monthly payments will then have their debt forgiven—an incentive to work in lower-paying jobs that benefit the public. But:
In a legal filing submitted last week, the Education Department suggested that borrowers could not rely on the program’s administrator to say accurately whether they qualify for debt forgiveness. The thousands of approval letters that have been sent by the administrator, FedLoan Servicing, are not binding and can be rescinded at any time, the agency said. [...]
Four borrowers and the American Bar Association have filed a suit in United States District Court in Washington against the department.
The plaintiffs held jobs that they initially were told qualified them for debt forgiveness, only to later have that decision reversed — with no evident way to appeal, they say. The suit seeks to have their eligibility for the forgiveness program restored.
Picture it: You choose to sacrifice some income to do work you value. You make your monthly payments. You check with FedLoan that your job qualifies you for forgiveness, and FedLoan says yes. And then suddenly, years later, the answer is no, with no way to appeal. It’s outrageous, and it shouldn’t take a lawsuit to fix it.