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Good News For PSLF: ABA Victory Against Department of Education

askHFTD : February 24, 2019 4:14 pm : blog

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

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Quick Non-Update on ABA Case

askHFTD : December 19, 2018 7:32 pm : blog

We’ll have to wait until January 9, 2018 for the transcript release of the September 26, 2018 motion hearing. That’s when the redacted transcripts will be released and we’ll see how the ABA’s motion for preliminary injunction fared against the Department of Education.

The briefs for the motion hearing can be found here:



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Proof of Qualifying PSLF Employers

askHFTD : December 19, 2018 7:22 pm : blog

How do the PSLF servicer officials check whether your employer qualifies for PSLF? While researching the recent PSLF statistics from the GAO Report, we found that the following sources are used: IRS list of 501(c)(3) organizations, government websites, and private websites:

“Education directs the PSLF servicer to review the Internal Revenue Service’s public list of 501(c)(3) organizations to identify qualifying nonprofit employers. Since this list does not capture all potentially qualifying nonprofits, the PSLF servicer supplements this with other sources that have not been fully reviewed or assessed for accuracy by Education. For example, PSLF servicer officials told us they use an online directory of nursing home facilities to help determine if certain nursing homes are nonprofit employers. However, this website explicitly states that it does not guarantee that the information it provides is accurate or current. PSLF servicer officials also said they sometimes use state government websites to research organizations’ nonprofit status, but they only have access to the relevant information from states that provide it for free. For assessing government employers, Education directs the servicer to, an official federal government website that describes government agencies and services, but this source provides limited information on state and local government employers. In addition, PSLF servicer officials said it is particularly difficult to assess certain types of employers, such as quasi-governmental entities and charter schools. PSLF servicer officials said that when they are uncertain whether an employer qualifies, they elevate the assessment to Education, but they generally try to resolve as many employer determinations as possible by using supplemental sources to research employers.” Page 18 of GAO Report. (

The GAO Report also touched on the possibility of creating a database of qualifying employers:

“Education officials said they are considering creating their own list of qualifying employers and are investigating how to leverage information from other federal government agencies that could be useful for categorizing employers. In particular, Education officials said they have reached out to the Internal Revenue Service to explore the feasibility of obtaining relevant data on employers. Education could also expand and improve on a database that the PSLF servicer created based on its prior assessments of employers.” Page 19 of GAO Report. (


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