California AG sues DeVos over troubled public service loan forgiveness program

This story has been updated include comments from the Department of Education.

California Attorney General Xavier Becerra is suing Education Secretary Betsy DeVos over a roundly criticized loan forgiveness program designed for public service workers.

The lawsuit alleges that the Education Department (ED) is “flouting Congress’s clear and repeated instructions to provide student loan debt relief to public servants” and making loan forgiveness “virtually inaccessible” through a “convoluted application process” for these borrowers.

“College graduates who put in a decade of hard work and made timely payments on their student loans earned their [temporary public service] loan forgiveness,” Attorney General Becerra said in a statement. “But Education Secretary Betsy DeVos chose to ignore all of that. Today's lawsuit reminds Secretary DeVos that she is not above the law.”

Becerra added that DeVos “is accountable to these college graduates who followed the rules and deserve better, especially amidst an economic crisis of historic proportions.”

NEW YORK, NEW YORK - FEBRUARY 20: Anchor Maria Bartiromo interviews Education Secretary Betsy Devos during "Mornings With Maria" at Fox Business Network Studios on February 20, 2020 in New York City. (Photo by John Lamparski/Getty Images)
Anchor Maria Bartiromo interviews Education Secretary Betsy Devos on February 20, 2020 in New York City. (PHOTO: John Lamparski/Getty Images)

Amid the coronavirus pandemic, this “mismanagement” of the loan forgiveness programs to public servants “is shameful and illegal,” the lawsuit stated.

In response to the lawsuit, U.S. Department of Education Press Secretary Angela Morabito argued that the loan forgiveness program was problematic because it was poorly designed by Congress and blasted Becerra.

“This is yet another political stunt by an activist state attorney general hoping to curry favor with left-wing activists,” Morabito said in a statement provided to Yahoo Finance. “We have said it before, and we’ll say it again: The PSLF program needs a permanent fix. When the PSLF program was written more than a decade ago, the Department provided technical assistance to Congress and made Congress aware that only a small fraction of borrowers would qualify because of the way they wrote the law.”

With regards to the temporary expanded program, she added: “The Temporary Expanded PSLF opportunity didn’t fix any of these problems. The Department must implement laws as they were written by Congress.”

PSLF, TEPSLF explained

The Public Service Loan Forgiveness (PSLF) program was created in 2007 by Congress to encourage students to enter public service jobs, such as teaching, firefighting, law enforcement, public defenders, family and child services employees, and some medical workers.

The promise made for undertaking such jobs would be that after they made 120 on-time loan payments (or 10 years’ worth), they’d have the remaining balance forgiven.