Concern is growing that the Department of Education may retroactively refuse to honor loan forgiveness as part of the Public Service Loan Forgiveness program (PSLF) to participants who are employed by certain nonprofit organizations.

In December of 2016 the American Bar Association filed a lawsuit against the Department of Education to stop the Department’s retroactive implementation of a test for employer eligibility that does not appear in the statute or regulations. The plaintiffs include lawyers who received certification by the Department of their employer qualifying for the program. Years later the Department of Education notified the plaintiffs their decision had been reversed. The Department of Education argued in a legal filing that certain approval letters they have sent in the past are not binding. To read more about this lawsuit click here.

The PSLF was enacted in 2007 to provide incentive for individuals to enter public service. Under the program an individual who works for 10 years and makes timely payments will have their loans forgiven.

This may be an issue for Human Resources departments at nonprofit organizations that have had employees participate in the PSLF program. The Department of Education is not providing public notice of the change. If your organization or members may be impacted by this, please contract Kenneth J. Goldsmith, Director for State Legislation at the American Bar Association at kenneth.goldsmith@americanbar.org or at (202) 662-1789.