- California is suing Secretary of Education Betsy DeVos and the U.S. Department of Education for what the state alleges is a failure to implement its forgiveness program for student loans.
- Congress created the Public Service Loan Forgiveness program to encourage students to take public service jobs by promising forgiveness of the remaining balance of their federal student loans after a decade of on-time payments.
- But 99% of loan forgiveness applications under that program were rejected between May 2018 and May 2019.
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 canceled.
Congress created the Public Service Loan Forgiveness program in 2007 to encourage students to take public service jobs, like education and firefighting, 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 forgiveness to borrowers 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, Becerra said the Education Department 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, and the state accounts for 10% of the nation's college enrollment, more than any other state.
"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 Education Department 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.