FOR the greater part of the last decade, the Department of Education’s (DOE’s) Public Service Loan Forgiveness program (PSLF) has served as a beacon of hope and stability for thousands of public sector professionals struggling with the burden of educational debt.
The PSLF was enacted in September 2007 with overwhelming bipartisan congressional support. It was a response to drastic increases in the cost of education and
the amount of debt that students incurred as a result of educational investments. As
part of the larger College Cost Reduction and Access Act, the PSLF would first and
foremost function as an incentive for students to pursue long-term, full-time careers
in public service and public interest law. Though not limited exclusively to the legal
profession — the PSLF covers a broad range of occupations including health professionals, teachers, and first responders1 — new lawyers have relied on the PSLF to
pursue careers with organizations that engage in important public interest work.
At its inception, the PSLF offered a straightforward promise to law students and
new lawyers. First, work in a qualified public service job for a term of 10 years. The
DOE issues certifications at the start of the term based on an individual’s eligibility
for the PSLF. Second, make timely monthly payments, capped at a percentage of the
borrower’s income, for the entirety of that term. Then, at the end of the 10-year period,
the remaining balance of your loans will be forgiven and discharged. 2
Under the original PSLF program, “public service” was defined broadly to include
organizations that provide public education services, public interest legal services,
public service for those with disabilities, and public service for the elderly. 3 The broad
language demonstrates the legislature’s intent to not only incentivize work in traditional government jobs such as prosecution and public defense, but to incentivize
careers in a number of nontraditional legal organizations that provide services to an
underserved and often indigent clientele.
Over the last several years, law students and new lawyers have relied on the incentives provided by the PSLF to make crucial and far-reaching decisions about the
direction of their legal careers. Students are leaving law school with more debt than
ever before. Because of that, many young lawyers face a distressing career crossroads:
They can either pursue a job that pays the most, regardless of their interest in the job
LAW SCHOOL LOANS
UNDER FIRE
itself, or they can pursue a lower-paying
job that fits their career objectives, but
then watch as the balance on their law
school debt continues to skyrocket. It is
important to note that not every public
interest lawyer is put in this position.
There are many who would spend their
entire careers in public service regard-
less of salary. But having to make this
choice is a reality that many new lawyers
do face, and a reality that the legislature
aimed to alleviate through the PSLF.
The value of the program is not just
a one-way street for young lawyers. The
PSLF is critical to the public sector’s
ability to recruit and retain top talent.
Acknowledging a sizable gap between
the salaries at private firms and those
at government institutions and non-
profit legal organizations, employers
often rely on PSLF to incentivize pro-
spective employees to join their organi-
zation. It becomes mutually beneficial.
Employers are able to attract top talent,
while employees are able to engage
in extremely valuable public interest
work with the financial peace of mind
that their loans will be forgiven after a
specified period of time.
CHANGING TIDES
In 2016, nearly 10 years after PSLF was
enacted, the DOE narrowed its definition of public service and excluded a
number of organizations from qualification for the PSLF. Despite previously
issuing promissory certifications to lawyers who worked in those organizations
acknowledging that their employment
qualified, the DOE has now issued a rescission of those promises and is refusing to honor them.
Applying its new interpretation retroactively, the DOE has informed lawyers
who have for worked up to nine years in
qualifying PSLF organizations and who
were set to have their loans forgiven
that they no longer qualify. Their previous payments towards PSLF no longer
count. These lawyers, many of whom are
still six figures in debt, have essentially
been “shown the door” by the very same
by Chris Morgan
Changes to the Public Service
Loan Forgiveness Program
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