More than 550,000 student loan borrowers who signed up for a federal program that promised to repay their student loans after they work 10 years in a public service job may be invalid, according to the Department of Education.
In a court filing last week, the Education Department suggested that borrowers could not rely on the program’s administrator to say accurately whether they qualify for student loan debt forgiveness. Even more appalling, the thousands of approval letters sent out by FedLoan Servicing are considered to be non-binding and can be rescinded at any time.
The filing adds to questions and concerns about the student loan forgiveness program, which offered major benefits and incentives for student loan borrowers who took public service jobs instead of more lucrative work in the private sector.
The American Bar Association and several borrowers have filed suit in the U.S. District Court in Washington against the department. The plaintiffs in the case held jobs that they initially were told qualified for the debt forgiveness program; only later to find out the decision was reversed. The lawsuit seeks to have their eligibility for the forgiveness program reinstated.
The student loan debt forgiveness program covers people with federal student loans who work for 10 years at a government or nonprofit organization, and includes public school employees, museum workers, doctors at public hospitals and firefighters. The federal government approved the program back in 2007. The first potential beneficiaries of the program reach the end of their 10-year commitment this October.
Approximately 25 percent of the nation’s workforce may qualify for the program, according to the Consumer Financial Protection Bureau.
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