California Sues Trump Team Over Student Loan Forgiveness

(Bloomberg) -- The Trump administration has repeatedly failed to follow through on bipartisan student-loan forgiveness legislation from 2007 designed to encourage graduates to take vital public sector jobs such as teacher and emergency medical technician, California claimed in a lawsuit.

The law allows such employees to seek loan forgiveness after 10 years of payments in recognition of their work in roles -- also including public defender, firefighter and social worker -- that often pay less than in the private sector, where they could have worked given their degrees.

According to the suit, filed Wednesday in federal court in San Francisco, Education Secretary Betsy DeVos has failed to implement the program, and almost all loan forgiveness requests have been denied since 2017, when 99% were rejected.

“Today's lawsuit reminds Secretary DeVos that she is not above the law,” California Attorney General Xavier Becerra, a Democrat, said in a statement. “She is accountable to these college graduates who followed the rules and deserve better, especially amidst an economic crisis of historic proportions.”

The Trump administration has frequently been criticized by politicians and student groups over its handling of student loans to lower-income Americans. Last week DeVos was accused in a lawsuit of illegally seizing millions of dollars in tax refunds from students who defaulted on federal loans despite a congressional ban on such collections during the coronavirus pandemic.

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The Education Department didn't immediately respond to an email seeking comment on Wednesday's suit.

The law that created the Public Sector Loan Forgiveness program was enacted in 2007. Congress temporarily extended the program in 2018 so DeVos could address legislators' concerns that far too many requests were being denied.

The rejection rate only ticked down to 94%, Becerra said. Part of the problem is the government's failure to replace a “convoluted” application process with a simpler method as required by Congress, the state says.

California alleges the administration's failure to follow through on the program is particularly harmful during the pandemic, when so many public sector workers are putting their lives on the line and other workers are being kept home during the lockdown.