Law school is essential to becoming a successful lawyer but it doesn’t come cheap. Public Service Loan Forgiveness was a program put in place to entice young lawyers to take public service positions which have historically paid less than private sector positions. After ten years of making on-time, full payments while in a public service role, the loan would be forgiven. Recently, though, the Department of Education was sued by the ABA for not keeping its promises. Even after declaring those involved in the program to be fully qualified for loan forgiveness, it was later decided later that they were not qualified. In this rebroadcasted episode of the ABA Law Student Podcast, host Chris Morgan discusses these events with the president of the ABA, Linda Klein. They dive into the original goals of the program, why the program is necessary, and actions the ABA is currently taking to ensure those relying on the program are compensated. Linda concludes by saying that the Department of Education’s decision will also affect the ability of the ABA to provide legal services to those that need it most.
Linda Klein is the senior managing shareholder at Baker Donelson Bearman Caldwell & Berkowitz and president of the American Bar Association. Klein’s practice, based in Atlanta, includes most types of business dispute resolution, including contract law, employment law and professional liability, working extensively with clients in the construction, higher education and pharmaceutical industries.
ABA Law Student Podcast
Broken Promises and Public Service Loan Forgiveness
Laurence Colletti: Hello listeners. This is Legal Talk Network Executive Producer Laurence Colletti. This month our law student friends are taking the bar exam but despair not, we have an excellent archival episode for you. You might remember last month’s installment with host Chris Morgan and ABA President Linda Klein updating us on the American Bar Association’s lawsuit against Department of Education, which stemmed from changes to the Public Service Loan Forgiveness Program. What you are about hear is the first episode with Chris and President Klein on an interview in January 2017, shortly after the ABA filed that lawsuit. We hope you enjoy the show.
Intro: Welcome to the official ABA Law Student Podcast where we talk about issues that affect law students and recent grads. From finals and graduation to the bar exam and finding a job, this show is your trusted resource for the next big step. You are listening to the Legal Talk Network.
Chris Morgan: Hello, and welcome to another edition of the ABA Law Student Podcast here on Legal Talk Network. I am Chris Morgan, Governor of the ABA Law Student Division’s 12th Circuit and a 3L at the Gonzaga University School of Law in Spokane, Washington. Our show today is sponsored by the American Bar Association’s Law Student Division. And in this monthly podcast we cover topics of interest to you, law students and recent grads. We hope this show is a trusted resource for all of our listeners.
For this show, Linda Klein, President of the American Bar Association joins us. Linda earned her JD at Washington & Lee Law School in Virginia, and is the senior managing shareholder at Baker Donelson. She is listed in best lawyers in America, Who is Who in America and Chambers USA. She is also regularly named to super lawyers’ top 100 in Georgia.
Hey Linda, thanks for joining us today on the show to talk a little bit about the Public Service Loan Forgiveness Program, and kind of some of the things that have come up with that the last several months.
Linda Klein: I am glad to be here and I am very interested in talking about this topic today and sharing with all the law students in America.
Chris Morgan: So it might be best to start with a little bit of background about Public Service Loan Forgiveness, and how the program was enacted back in 2007.
Linda Klein: Interestingly, the ABA has been a champion of Public Service Loan Forgiveness from the time it was conceived, and that was in, probably about 2004, and the ABA worked with Congress over several years and then it was signed into law by the second President Bush, George W. Bush in October 2007.
And the purpose was to provide incentives for graduate and it’s not just law school, for graduates to pursue full-time Public Service careers by giving them a forgiveness of their student loan debt balance if they made timely loan payments for 10 years, 10 years, while they were working in public service job. And the formula for what they would be paying back is roughly 10% of their income, and they measured that monthly.
So the program defines public service jobs as those providing public interest law services, public education, public service for people with disability, public service for the elderly, those are just some examples. And there is an estimate from the Congressional Budget Office that said that there could be as many as 432,000 borrowers on student loans that could be involved with the program.
Of course, we don’t know how many will seek loan forgiveness and of course, it’s not 10 years yet. But there was a time and the Law Student Division was deeply involved with the ABA on this, and I know I got involved in it too, where there was a decision, a discussion in Congress that Public Service Loan Forgiveness would be zeroed out in the budget, and I am talking about last year and the year before in the Obama Administration in the last Congress. And the ABA started a social media campaign, Save Loan Forgiveness, and it was #Loan4Giveness.
We are not talking about that right now. We are talking about people who have been in the Public Service Loan Forgiveness Program some for as many as nine years, and that’s what the lawsuit is about. So we are going to be talking about that and I guess I will go ahead and answer your further questions.
Chris Morgan: All right. So again, just to kind of catch everyone up to speed, I think it was back on the 20th of December, the ABA decided to file suit against the Department of Education based on retroactive denial of people who had already been in the program, is that correct?
Linda Klein: That’s exactly right, but maybe technically I can clean up exactly the history a little bit and I would like to tell everybody the entire history.
Chris Morgan: Okay.
Linda Klein: So, for example, there were lawyers who worked in the ABA that for several years had been getting a letter every year from the Department of Education that certified that they were eligible for Public Service Loan Forgiveness.
In fact, the letters which I believe are attached to the complaint that we filed in the Federal Court in Washington say you have got this many qualifying months, and if you do this many more qualifying months, your loan balance will be forgiven at the end.
And then mysteriously last spring they started receiving letters that said, you know all those letters you got in the past, we take it all back. And that was just unfair, and the ABA believes that we need to hold the Department of Education accountable for the promises it made to these lawyers that made the choice to dedicate their careers to public service.
And many of these people entered into these professional careers carrying debt well into the six figures and they didn’t choose lucrative jobs, they opted for public service.
So we at the ABA said, that these lawyers relied on a promise that the Department of Education made to them. If you make your loan payment in full, on time at the reduced fee while working in a public service job, then after 10 years the remaining debt will be forgiven. And so there are four named plaintiffs in this lawsuit and the Department of Education told three of them that they were working in these qualified jobs, they were on track for loan forgiveness and then they did a total about-face, they pulled the rug out from under them, no warning, no logical explanation and they were told that their years of public service counted for nothing as far as the program went, despite these previous assurances that they were qualified for the program.
And this is where it’s going. These lawyers made a financial decision, a career decision. They made life decision based on the promises of the Department of Education. The American Bar Association believes that the Department of Education must be held responsible and they must honor these promises.
I want to assure everyone that the lawsuit was not just filed on a whim. The ABA tried to engage with the Department of Education. Over several months, there were meetings at the Department of Education. I attended a meeting at the Department of Education with the Executive Director of the American Bar Association, with the President-elect of the American Bar Association. In fact, even with the lawyer from our ABA Government Affairs office that was involved in the years before Public Service Loan Forgiveness even became a law.
And at that meeting we describe what the problem was and that meeting — the last meeting took place in October. We were promised an answer within 30 days. On December 1 a letter was drafted that we got soon, thereafter that said that they were not going to change their mind and that’s why on December 20th we filed this lawsuit. I would like to — while I am talking about lawsuit, to thank the Law firm of Ropes & Gray, they are working as pro bono counsel to the ABA and the named plaintiffs in the lawsuit.
Chris Morgan: It’s great. So, yeah I was going to get to that. It sounds like based on the complaint the ABA did reach out to the Department of Education, and kind of try and talk through with them and see where they were at, is it just the start of the department tightening up on individuals in the program or are they wanting to limit the definition of service just for the fact that they don’t want to pay out the money at the end of the term or is there some other explanation?
Linda Klein: Well, I guess we wish we knew. One of the plaintiffs and this is detailed in the lawsuit, one of the named plaintiffs who has filed a Freedom of Information Act request and said, tell us why you did this, and the department told her that there were 200 pages of responsive documents and they sent her a hundred 198 blank pages.
They redacted 198 pages, so we don’t know. They claimed that they were redacted because this was part of the deliberative process, but the deliberative process is over once they have made a decision. So we don’t know, we wish we did know, but we don’t know what was behind the department’s thoughts here.
Chris Morgan: Are there particular types of organizations that we think are going to be affected by the Department of Education’s change in policies, and specifically 501(c)(6) organizations or have they given any indication to your knowledge of how they plan to limit this definition moving forward?
Linda Klein: Well, they haven’t except that the ABA is 501(c)(6). The ABA is a nonprofit, non-partisan organization dedicated to public interest law services. It meets the criteria that was set out by the Department of Education to qualify as a lawyer for Public Service Loan Forgiveness. It meets the definition in the statute.
And then suddenly without explanation the ABA was told that it did not qualify, but there are many nonprofit organizations in addition to the ABA that continue to struggle to attract and retain talented and committed professionals, and this is of great concern. But if the Department wanted to change the rule, there is a process, there is a public process that would be used to change the rule and then there would be a common period and none of that happened.
Chris Morgan: Will there be any delay, do you think in the soup moving forward as this new administration has yet to confirm a new head of the Department of Education or based on the statute will it just commence as normal on that timetable?
Linda Klein: As far as I know no one from the administration in any way has contacted the lawyers at Ropes & Gray, or the American Bar Association to ask for any type of extension. The Federal government has 60 days to answer a complaint and we’re not yet there as of the recording of this podcast.
Chris Morgan: So just to talk, I wanted to talk a little bit about the plaintiffs who were named in the lawsuit, as it seems even aside from those who are working with the ABA, it sounds like they were doing some pretty important public service work. Was there anything specific that they told you guys about why the Immigration Services or work with veterans wouldn’t qualify as public service?
Linda Klein: No one has told us that we’re looking at the plain meaning of the statute,, the regulations, everything that has been put together to date, that’s the opinion of the American Bar Association and the lawyers at Ropes & Gray that all of these lawyers are qualified.
I want to make it clear that it’s not just lawyers who are covered by Public Service Loan Forgiveness. The idea behind Public Service Loan Forgiveness was to be sure that we had people particularly after the recession that would pursue advanced degrees and use those advanced degrees to help close the gap between the demand on public service and the ability to meet the demand. This was the Congressional intent behind Public Service Loan Forgiveness. It was to get more people with graduate degrees into public service.
And as you know, since 2007 the gap has only widened and the need has never been greater. But you asked about the individual plaintiffs, one is an employee at the ABA. He’s worked with the ABA since 2014. He serves as an attorney for the Division for Public Service.
Another plaintiff is a former employee of the ABA and she worked as a Refugee Officer for United States Citizenship & Immigration Services now. Another one of the plaintiffs is a former employee of Vietnam Veterans of America. He currently works for Paralyzed Veterans of America where he’s an Associate General Counsel for PO. Another one of the plaintiffs is an employee of the American Immigration Lawyers Association. She’s worked there since 2012.
So it’s just unfair for the Department of Education to change its mind retroactively and refuse to honor an obligation and a commitment to all of these professionals that have been following the rules, some for possibly nine years and here it is on the eve of the first times that loans would need to be forgiven to just pull the rug out.
Think about the life decisions that were made based on this promise. It’s just unfair to leave them out in the cold. Think about the years of education and how costly they were for these people to get the degrees that they have and how dedicated they’ve been to a life of public service where they’re not making the kind of money they could in the private sector, but they’re doing such an enormous job for the public and one the Congress wanted them to do by passing this law.
Chris Morgan: Right. Can you talk a little bit more about how difficult this policy now makes it on retention and for hiring and retaining these employees who want to work in public service, who many of them went to law school for the purpose of engaging in public service after law school?
It seems a lot of students at least that I know went to law school knowing about the Public Service Loan Forgiveness program and even took out loans to get into law school, in order to finance law school under the knowledge that they would be able to repay them down the road.
What effect does that have first on legal education and then on hiring and retaining public service employees out in the real world of practice?
Linda Klein: The students that you mentioned, the ones who went to law school to become public service lawyers, the ones who went to law school knowing about Public Service Loan Forgiveness and hoping that they could be part of it. You are the lawyers that the American Bar Association is fighting for, because we agree that it is disgraceful to make a promise and then take it away and that’s exactly the problem and you put your finger right on it. And there are many nonprofit organizations, not just the ABA who will now find it much more difficult to attract and retain these talented and committed professionals.
One example, the ABA has a program called ProBAR and that provides pro bono representation to people seeking asylum at the Texas border. Some of the lawyers in ProBAR have resigned, some of them have given their notice that they will resign and they’re concerned if they can no longer do this work.
What’s interesting and we shared this with the Department of Education, the US Department of Justice is providing funding for the lawyers that are working for the ABA at the Texas border. So we have one group of the government providing funding for the ABA to do this work and another part of the government saying, well, we’re taking back our promises. It’s just not fair.
And thinking about these actions with Public Service Loan Forgiveness by the Department of Education, it’s definitely going to make it more difficult for the ABA to provide the public interest law services that we do, that veterans, domestic violence victims, refugees, homeless, elderly, disabled, children, it goes on and on and that’s why the ABA is so dedicated to these issues.
Chris Morgan: Okay, Linda, well, thanks again for coming on and talking with us. This is a huge issue that I know us at the Lawsuit Division have been keeping an eye on and have been working on as you know for a long time and I know from us and for a lot of the law students out there really appreciate the support and the diligence with which the ABA has been approaching this issue the last several months.
All right so before we finish up here just one last question for you Linda, for our listeners out there who want to follow up with you and learn a little bit more, how can they reach out to you?
Linda Klein: You can reach me at abapresidentandamericanbar.org. If you want more information about the Public Service Loan Forgiveness lawsuit and where we are right now you can get a copy of the lawsuit and other things online at the ABA website. We’re going to have to put the link because it’s too long to say it in the notes that go with this podcast, this way everybody can get to the information that they need.
But I’d like to say one more thing, if you’re a law student and you’re interested in public service jobs, there are other programs likely besides Public Service Loan Forgiveness the ABA is going to continue to fight for Public Service Loan Forgiveness. We intend to win but you need to be very aware that the Public Service Loan Forgiveness program is part of discussions in Congress about how far it might go forward and for those of you who are already part of the Public Service Loan Forgiveness program, it’s part of this litigation. So you need to be very careful, you need to do all of your homework.
Chris Morgan: Thanks again Linda for joining us, looking forward to seeing you down at ABA mid-year in Miami.
Linda Klein: We’re looking forward to seeing everyone at the ABA mid-year meeting in Miami and it will be starting February 2nd and go through February 6th so we’re looking for better weather than there is in Spokane today, that’s for sure.
Chris Morgan: I hear that, thanks again Linda for coming on, I really appreciate it.
Linda Klein: My pleasure, Thank you very much and thanks for your continuing interest in Public Service Loan Forgiveness. I have a feeling that they’ll be more to talk about between now and the annual meeting.
Chris Morgan: Of course, we’ll talk to you soon. We hope you’ve enjoyed another episode of our podcast. We encourage you to subscribe to the ABA Law Student Podcasts on iTunes so you don’t miss an episode and take time to rate and review us as well.
You can also reach us on Twitter at @ABALSD using the #Law Student Podcast. We would love to hear what’s on your mind. I am Chris Morgan and thank you for listening to the ABA Law Student Podcast here on Legal Talk Network. Until next time, take care.
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