June 3, 2020

California sues Betsy DeVos over federal program’s lack of student loan forgiveness

California sues Betsy DeVos over federal program's lack of student loan forgiveness

U.S. Secretary of Education Betsy DeVos listens during a cabinet meeting in the East Room of the White House on May 19, 2020 in Washington, DC. Earlier in the day President Trump met with members of the Senate GOP.

Alex Wong | Getty Images

California is suing Education Secretary Betsy DeVos and the U.S. Department of Education for what the state alleges is a failure to implement its student loan forgiveness program for people who took on public-service jobs. 

“Today’s lawsuit reminds Secretary DeVos that she is not above the law,” California Attorney General Xavier Becerra said in a statement Wednesday.  

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

DeVos has been a lightning rod in the education world and in Washington. Her critics have highlighted her multimillion-dollar wealth and connections to various industries, and pointed to her family’s previous donations to Republican efforts. Consumer advocates have also said she’s made it harder for defrauded students to get their loans cancelled.

Congress created the Public Service Loan Forgiveness program in 2007 to encourage students to take public service jobs, like education and fire-fighting, by promising forgiveness of the remaining balance of their federal student loans after a decade of on-time payments. In 2013, the Consumer Financial Protection Bureau estimated that one-quarter of American workers could be eligible.

Yet a complicated loan system and misinformation by lenders led to many borrowers hitting walls. Ninety-nine percent of loan forgiveness applications under that  program were rejected between May 2018 and May 2019. 

In 2018, Congress set aside hundreds of millions of dollars to fix the troubled program. The temporary expansion aimed to deliver borrowers forgiveness who hadn’t been told by their lender or didn’t understand that they were enrolled in a payment plan that disqualified them. 

In the lawsuit filed Wednesday, Becerra said that the U.S. Department of Education continues to deny almost all borrowers who apply for debt forgiveness under the program. California, the most populous state in the country, is home to the sprawling University of California system, which boasts 280,000 students and 2 million alumni living worldwide. There are over 700 colleges in California, overall.

“College graduates who put in a decade of hard work and made timely payments on their student loans earned their TEPSLF loan forgiveness. But Education Secretary Betsy DeVos chose to ignore all of that,” said Becerra, who has sued the Trump administration more than 80 times.

The U.S. Department of Education has received more than 196,000 applications for public service loan forgiveness, and has approved just around 3,400, according to higher education expert Mark Kantrowitz. 

The Education Department did not immediately respond to a request for comment.

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