Good News For PSLF: ABA Victory Against Department of Education

On February 22, 2019, the District Court issued its opinion, finding the “U.S. Department of Education changed its interpretation of Public Service Loan Forgiveness regulation, it did not adhere to notice standards mandated under the Administrative Procedure Act, and those changes were arbitrary and capricious” (See

“’We are gratified with the Court’s finding that the Department of Education implemented the PSLF program in an arbitrary and capricious manner with respect to two former ABA employees. We hope the Department will follow the Court’s guidance and reaffirm the PSLF eligibility of all former and current ABA employees,’ Jack L. Rives, executive director of the ABA, wrote in an email to the ABA Journal.” (See

Some of our favorite parts of the opinion (full opinion) are below:

1. For example, the Department’s “Dear Borrower” letter—which was sent to all borrowers interested in the PSLF Program, such as the Individual Plaintiffs, see AR 142—instructed borrowers that, when submitting their final application for loan forgiveness, they “do not have to re-submit [ECFs]” that have “already been validated by the Department,” AR 153. In the same letter, the Department informed them that it “will review” an application for loan forgiveness along with any ECFs “not previously validated by the Department” in order to “determine if [a borrower] fulfilled all of the requirements to be eligible for PSLF.” Id. (emphasis added). Therefore, the Department’s own language confirms that when it “validates” a borrower’s employment and loan payments made during her time there, its determination marks the consummation of a process that is not revisited. At that point, “for all practical purposes [the Department] ‘has ruled definitively’” on whether the payments count toward the 120 required by the PSLF statute. U.S. Army Corps of Eng’rs v. Hawkes Co., Inc., 136 S. Ct. 1807, 1814 (2016) (quoting Sackett, 566 U.S. at 131 (Ginsburg, J., concurring)). Page 22-23 Opinion.

2. Defendants argue that the denial letters did not have “an immediate or significant practical effect” on the Individual Plaintiffs because their “eligibility for PSLF had not yet been finally determined.” Dfs.’ MSJ Br. at 17 n.6. This is nonsense. In the face of growing debt burdens, the Individual Plaintiffs structured their careers and long-term financial plans around their eligibility for the PSLF Program. The Department’s determinations quite obviously had an “immediate” and “significant” impact on their ability to plan their careers and finances, despite the fact that they have not had (and may never have) the opportunity to submit an application for loan forgiveness. Page 24 of Opinion.

3. Significantly, the Department represented that borrowers would be able to use the form to collect employment certifications at the close of the 120-month qualifying period, but also at other intermittent times as well. 73 Fed. Reg. at 63,242; AR 46. The Department did note that it “expect[ed] the borrower to collect and retain the necessary records that support the borrower’s eligibility for this benefit.” 73 Fed. Reg. at 63,242; AR 46. But in the end, the Department’s statements in the Federal Register do not undermine the conclusion that the denial letters represented the consummation of the Department’s process in determining whether the Individual Plaintiffs’ employment—and loan payments made during that employment—qualified under the PSLF Program. Page 25 of Opinion.

4. There is no indication in the record that, prior to issuing the denial letters to Quintero-Millan and Burkhart, the Department acknowledged that it changed its practices by adopting the Primary Purpose standard, provided a reasoned analysis for such a change, or demonstrated that it had considered the substantial reliance interests at stake. Nor did the Department meet these minimum requirements in the denial letters themselves. Indeed, the Department did not even reference the Primary Purpose standard as the basis for its decision in the denial letters issued to Quintero-Millan and Burkhart, although it now asserts that it relied on it when evaluating the eligibility of ABA employees at that time. See Dfs.’ MSJ Br. at 27. And to this day, the Department has not acknowledged that it changed its practices in this regard. Page 41-42 Opinion.

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