The American Federation of Teachers has filed a lawsuit against the U.S. Department of Education on behalf of educators who argue that they have been wrongfully denied loan forgiveness under the federal public service loan forgiveness program.
The Public Service Loan Forgiveness program was created more than a decade ago to encourage young graduates to seek employment in a government job or in public service industries. While the pay in these types of jobs tends to be lower, the promise of having their federal student loans forgiven at the end of a ten-year period was created to entice them to apply for these positions.
Under the program, borrowers who work in certain public service professions, including law enforcement, nursing, and teaching, and who make payments consistently for ten years, can have their federal loans forgiven. It is estimated that more than one million borrowers have filed official paperwork to participate in the program. However, many of these borrowers are finding out that they suddenly do not qualify for forgiveness for one reason or another, including not carrying the correct type of loan.
The filed complaint is asking the court to order the Department to fix the broken program so that it meets legal requirements. They are also requesting that the Department create an appeals process for borrowers who have been denied loan forgiveness and believe this was done unfairly.
Participating borrowers are required to check in every year to confirm that they are making payments as required under the program and are working in a qualifying industry. The problem is many of the borrowers are now finding out that after ten years of payments, they did something incorrectly that disqualifies them from loan forgiveness. In fact, according to the Department, only one percent of borrowers have been approved for loan forgiveness under the program.
One major issue that is preventing borrowers from receiving forgiveness has to do with the type of repayment plan or loan they have. For the public service loan forgiveness program, borrowers are required to have a direct federal loan. However, many lenders are not clarifying this with their borrowers before it is too late, leaving the borrowers paying on a loan that is not technically the correct type of loan or repayment plan for years.
The lawsuit filed by the American Federation of Teachers alleges that the Department was aware of this fact and did nothing to alleviate the problem. The lawsuit also alleges that the Department is aware of the fact that loan servicers are not always keeping track of the number of qualifying payments made by borrowers, also leading to denial of loan forgiveness applications. They say that this unfair treatment and the broken system violates the borrowers’ due process rights.
For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.