WEBVTT 00:00:00.000 --> 00:00:02.660 Welcome back to the deep dive. If you've ever 00:00:02.660 --> 00:00:04.940 felt just, you know, completely overwhelmed trying 00:00:04.940 --> 00:00:07.700 to navigate a sprawling government program that 00:00:07.700 --> 00:00:10.400 promises these huge rewards, but mostly just 00:00:10.400 --> 00:00:13.439 delivers intense frustration, then this deep 00:00:13.439 --> 00:00:16.239 dive is for you. It really is. We've cracked 00:00:16.239 --> 00:00:19.679 open the files, the GAO reports, the court filings, 00:00:19.679 --> 00:00:22.320 and even the latest executive actions, all concerning 00:00:22.320 --> 00:00:24.199 the Public Service Loan Forgiveness Program, 00:00:24.420 --> 00:00:27.719 or PSLF. And, you know, PSLF started as this 00:00:27.719 --> 00:00:31.179 really powerful, almost elegant incentive. The 00:00:31.179 --> 00:00:33.500 goal was to funnel talent into these critical, 00:00:33.700 --> 00:00:36.219 often underpaid public roles. And we're talking 00:00:36.219 --> 00:00:39.259 teaching, nursing, military service. But for 00:00:39.259 --> 00:00:41.799 more than a decade, it became the absolute poster 00:00:41.799 --> 00:00:44.609 child for systemic bureaucratic failure. So our 00:00:44.609 --> 00:00:46.869 mission today is surgical. We are going to provide 00:00:46.869 --> 00:00:48.649 you with the essential framework for eligibility, 00:00:48.990 --> 00:00:51.409 show you exactly why the program denied, what, 00:00:51.469 --> 00:00:53.789 99 % of its first applicants? It's an unbelievable 00:00:53.789 --> 00:00:56.710 number. And we'll also analyze how recent and, 00:00:56.750 --> 00:00:58.750 frankly, politically charged executive actions 00:00:58.750 --> 00:01:00.810 have changed the very definition of what public 00:01:00.810 --> 00:01:03.609 service even means going forward. Okay, let's 00:01:03.609 --> 00:01:06.109 unpack this. We're really dealing with a government 00:01:06.109 --> 00:01:09.250 initiative that was designed to tackle two massive 00:01:09.250 --> 00:01:12.290 problems at the same time. The student debt crisis. 00:01:13.069 --> 00:01:16.049 And the public service talent gap. Exactly. So 00:01:16.049 --> 00:01:17.829 let's set the historical stage. We hear a lot 00:01:17.829 --> 00:01:21.650 about PSLF now, but its origins are, well... 00:01:21.900 --> 00:01:23.920 They're often forgotten. What's fascinating here, 00:01:23.980 --> 00:01:26.180 and I think a lot of people miss this, is that 00:01:26.180 --> 00:01:30.099 PSLF is not some recent concept tied to the debt 00:01:30.099 --> 00:01:32.739 relief discussions of the last few years. Not 00:01:32.739 --> 00:01:35.159 at all. It goes back further. Much further. It 00:01:35.159 --> 00:01:38.140 was established way back in 2007 under the College 00:01:38.140 --> 00:01:40.980 Cost Reduction and Access Act. And as a really 00:01:40.980 --> 00:01:43.939 crucial piece of historical context, that legislation 00:01:43.939 --> 00:01:46.579 was signed into law by President George W. Bush. 00:01:46.819 --> 00:01:49.040 So this wasn't a contentious single party initiative 00:01:49.040 --> 00:01:51.409 at its start? Not in the slightest. It originated 00:01:51.409 --> 00:01:54.069 as a bipartisan effort to make sure that someone 00:01:54.069 --> 00:01:56.670 who chose to become, say, a teacher in a high 00:01:56.670 --> 00:01:59.730 need area or a public defender wasn't forced 00:01:59.730 --> 00:02:01.989 out of that career path simply because of massive 00:02:01.989 --> 00:02:04.670 student loan payments. So the original core goal 00:02:04.670 --> 00:02:07.829 was crystal clear. You commit to 10 years of 00:02:07.829 --> 00:02:10.550 public service and in exchange, your remaining 00:02:10.550 --> 00:02:13.229 federal student debt gets canceled. It was meant 00:02:13.229 --> 00:02:15.990 to be a straightforward, decade long transaction. 00:02:16.270 --> 00:02:19.300 A simple tradeoff. Yes. And that simplicity is 00:02:19.300 --> 00:02:21.979 so key to understanding the sheer anger and confusion 00:02:21.979 --> 00:02:24.639 that followed. Because the formula itself is 00:02:24.639 --> 00:02:27.620 so elegant, you fulfill the requirements for 00:02:27.620 --> 00:02:30.360 120 months and you're done. Let's just lay out 00:02:30.360 --> 00:02:34.159 that simple formula for anyone who is in or maybe 00:02:34.159 --> 00:02:37.159 considering public service. These are the three 00:02:37.159 --> 00:02:40.500 pillars of PSLF eligibility that you as the listener 00:02:40.500 --> 00:02:43.539 have to track constantly. That's right. To achieve 00:02:43.539 --> 00:02:46.000 forgiveness, you needed to satisfy three non 00:02:46.000 --> 00:02:48.060 -negotiable requirements. And this is critical. 00:02:48.259 --> 00:02:50.439 They must be met concurrently. OK, what's number 00:02:50.439 --> 00:02:53.039 one? First, you have to make 120 qualifying monthly 00:02:53.039 --> 00:02:57.360 payments, not 119, 120. Second. Second, those 00:02:57.360 --> 00:02:59.599 payments have to be made under a qualifying repayment 00:02:59.599 --> 00:03:01.879 plan, which almost exclusively means one of the 00:03:01.879 --> 00:03:03.900 income driven plans. We'll get into why that 00:03:03.900 --> 00:03:07.110 is. In the third piece. Third, you absolutely 00:03:07.110 --> 00:03:09.650 must be working full time for a qualifying employer 00:03:09.650 --> 00:03:12.569 during that entire payment period. All three 00:03:12.569 --> 00:03:16.349 have to line up for all 120 months. So the program 00:03:16.349 --> 00:03:19.129 began in 2007, which means the clock started 00:03:19.129 --> 00:03:22.270 ticking immediately. The earliest possible date 00:03:22.270 --> 00:03:24.389 for anyone to get forgiveness would have been 00:03:24.389 --> 00:03:27.650 October 1st, 2017. Yes. That date was supposed 00:03:27.650 --> 00:03:30.530 to be a celebration, right? A moment of triumph 00:03:30.530 --> 00:03:32.349 for that first cohort of public servants. It 00:03:32.349 --> 00:03:35.129 was anything but. It was a disaster. That first 00:03:35.129 --> 00:03:38.129 milestone quickly exposed the systemic rot that 00:03:38.129 --> 00:03:40.129 was right at the heart of the program's execution. 00:03:40.490 --> 00:03:42.689 And we have data on this. We do. The Department 00:03:42.689 --> 00:03:45.810 of Education's own data confirmed it. As of April 00:03:45.810 --> 00:03:48.610 30, 2020, that's three full years after the first 00:03:48.610 --> 00:03:51.409 eligibility date, the total number of borrowers 00:03:51.409 --> 00:03:53.189 who had actually achieved forgiveness stood at 00:03:53.189 --> 00:03:59.050 only 2 ,215. 2 ,215 people. Out of tens of thousands 00:03:59.050 --> 00:04:01.270 who had applied and tens of thousands more who 00:04:01.270 --> 00:04:03.050 had committed 10 years of their lives to public 00:04:03.050 --> 00:04:05.580 service, All based on this promise. And that 00:04:05.580 --> 00:04:08.120 low number translates to a denial rate, that 00:04:08.120 --> 00:04:11.240 is. Yes. It's almost unbelievable. 98 .5%. We're 00:04:11.240 --> 00:04:14.539 just pausing on that. 98 .5%. We have to. You 00:04:14.539 --> 00:04:16.939 have to grasp the gravity of that number. We're 00:04:16.939 --> 00:04:18.980 talking about thousands of teachers, nurses, 00:04:19.100 --> 00:04:21.699 military personnel who structured an entire decade 00:04:21.699 --> 00:04:24.639 of their lives, maybe foregoing higher private 00:04:24.639 --> 00:04:27.480 sector salaries around a promise that was then 00:04:27.480 --> 00:04:29.779 systematically broken. And it wasn't because 00:04:29.779 --> 00:04:32.209 they didn't do the work. No. It was because of 00:04:32.209 --> 00:04:35.370 technicalities, bad advice from servicers, and 00:04:35.370 --> 00:04:38.069 just sheer administrative incompetence. And that 00:04:38.069 --> 00:04:40.170 is the foundational tension we are diving into 00:04:40.170 --> 00:04:43.550 today. The promise was monumental, but the execution 00:04:43.550 --> 00:04:46.970 was, frankly, catastrophic. That denial rate 00:04:46.970 --> 00:04:49.610 tells us immediately that the devil isn't just 00:04:49.610 --> 00:04:52.689 in the details. The devil is the details. So 00:04:52.689 --> 00:04:54.589 we need to transition now and really conduct 00:04:54.589 --> 00:04:57.569 a deep analysis of that fine print. Let's start 00:04:57.569 --> 00:04:59.850 with the eligibility criterion that trips up 00:04:59.850 --> 00:05:02.629 the most people. The qualifying employer. This 00:05:02.629 --> 00:05:05.069 is the big one. What is the single most crucial 00:05:05.069 --> 00:05:07.490 distinction here? Okay, the core takeaway that 00:05:07.490 --> 00:05:10.550 has to override everything else is this. Qualification 00:05:10.550 --> 00:05:13.910 is based only on your employer's status, not 00:05:13.910 --> 00:05:16.170 your individual job responsibilities. So it doesn't 00:05:16.170 --> 00:05:18.649 matter what you actually do all day. Not one 00:05:18.649 --> 00:05:21.230 bit. You could be a neurosurgeon or you could 00:05:21.230 --> 00:05:23.689 be an administrative assistant. If your employer 00:05:23.689 --> 00:05:26.290 qualifies, your employment counts toward those 00:05:26.290 --> 00:05:29.779 120 payments. This is where people often confuse 00:05:29.779 --> 00:05:32.600 PSLF with other kinds of service -based loan 00:05:32.600 --> 00:05:34.920 repayment programs. So if the job description 00:05:34.920 --> 00:05:37.959 doesn't matter, what types of organizations meet 00:05:37.959 --> 00:05:40.319 that qualification standard? Can you break it 00:05:40.319 --> 00:05:42.879 down for us? Sure. The regulations define three 00:05:42.879 --> 00:05:45.439 main buckets. The first is the most obvious. 00:05:46.089 --> 00:05:49.110 Government organizations or agencies at any level. 00:05:49.230 --> 00:05:52.149 Federal, state, local. All of it. Federal, state, 00:05:52.170 --> 00:05:54.670 or local. This is the simplest category. Your 00:05:54.670 --> 00:05:56.529 public school, your sedate health department, 00:05:56.689 --> 00:05:58.850 the U .S. military. If you get a paycheck from 00:05:58.850 --> 00:06:01.110 the government, you're almost certainly in. Okay, 00:06:01.149 --> 00:06:03.649 what's the second bucket? The second is 501c3 00:06:03.649 --> 00:06:06.350 organizations. These are the charitable organizations 00:06:06.350 --> 00:06:09.490 as defined by the IRS, and they are a huge, critical 00:06:09.490 --> 00:06:11.610 part of this program. And the requirements for 00:06:11.610 --> 00:06:14.170 that 501c status are pretty stringent, aren't 00:06:14.170 --> 00:06:16.790 they? They are. These organizations have to operate 00:06:16.790 --> 00:06:20.670 for what are called exempt purposes. So, charitable, 00:06:20.949 --> 00:06:24.910 religious, educational or scientific. The key 00:06:24.910 --> 00:06:27.170 phrase often overlooked is that they must not 00:06:27.170 --> 00:06:29.889 incur individual benefits or private gain. What 00:06:29.889 --> 00:06:32.149 does that mean in practice? Well, it's designed 00:06:32.149 --> 00:06:35.069 to exclude certain politically active groups 00:06:35.069 --> 00:06:38.290 or organizations that primarily benefit a really 00:06:38.290 --> 00:06:40.750 small group of individuals like a family foundation. 00:06:41.110 --> 00:06:43.569 It has to be for the public good, broadly speaking. 00:06:43.790 --> 00:06:46.149 Beyond that strict 501C definition, you said 00:06:46.149 --> 00:06:48.579 there's a... Third bucket for nonprofits. Yes. 00:06:48.720 --> 00:06:51.040 The third category is a bit of a catch -all, 00:06:51.079 --> 00:06:53.439 but it covers other nonprofit organizations that 00:06:53.439 --> 00:06:56.079 provide specific... designated public sizes, 00:06:56.420 --> 00:06:59.620 even if they aren't strict 501c3s. What kind 00:06:59.620 --> 00:07:01.759 of services? The list includes things like emergency 00:07:01.759 --> 00:07:04.540 management, public safety, public health, public 00:07:04.540 --> 00:07:07.480 education and public libraries. So it broadens 00:07:07.480 --> 00:07:09.360 the scope a little bit. OK, so just to give the 00:07:09.360 --> 00:07:11.600 listeners some really actionable examples, we 00:07:11.600 --> 00:07:13.779 know public schools and the military count. What 00:07:13.779 --> 00:07:16.199 about in the nonprofit sector? What should people 00:07:16.199 --> 00:07:18.939 be looking for? Think about the breadth of services 00:07:18.939 --> 00:07:21.540 covered there. We're talking about most nonprofit. 00:07:22.350 --> 00:07:24.850 private educational institutions, so everything 00:07:24.850 --> 00:07:27.509 from major universities to small liberal arts 00:07:27.509 --> 00:07:30.449 colleges, they almost always qualify. What about 00:07:30.449 --> 00:07:32.959 health care? Absolutely. Nonprofit hospitals, 00:07:33.540 --> 00:07:36.079 homeless shelters, community health clinics, 00:07:36.399 --> 00:07:39.500 food banks, legal aid societies. These are almost 00:07:39.500 --> 00:07:41.600 universally covered. But the key is they have 00:07:41.600 --> 00:07:46.399 to maintain that required 501c3 status. This 00:07:46.399 --> 00:07:49.500 means the benefit extends way, way beyond just 00:07:49.500 --> 00:07:51.660 state and federal employees. This is where it 00:07:51.660 --> 00:07:54.449 gets tricky, though. This specific area, the 00:07:54.449 --> 00:07:56.589 nuance between direct employment and contract 00:07:56.589 --> 00:07:58.850 work, has proven to be one of the most persistent 00:07:58.850 --> 00:08:01.670 failure points for borrowers. It's crucial for 00:08:01.670 --> 00:08:03.709 anyone working in what you might call a quasi 00:08:03.709 --> 00:08:05.790 -public setting. This is where thousands and 00:08:05.790 --> 00:08:07.790 I mean thousands of public servants lost their 00:08:07.790 --> 00:08:10.769 eligibility. The rule is simple but brutal. you 00:08:10.769 --> 00:08:13.250 must be directly employed by the qualifying entity. 00:08:13.509 --> 00:08:15.389 Not just working for them. No. If you were a 00:08:15.389 --> 00:08:17.329 government contractor, you generally do not qualify 00:08:17.329 --> 00:08:18.930 based on your contract with the government alone. 00:08:19.250 --> 00:08:21.790 Your employer is the private company that holds 00:08:21.790 --> 00:08:24.230 the contract. Can you walk us through a common 00:08:24.230 --> 00:08:26.970 scenario where this rule has burned people? Of 00:08:26.970 --> 00:08:30.050 course. Think of a state university system, which 00:08:30.050 --> 00:08:33.330 is a clear qualifying employer. Now, if that 00:08:33.330 --> 00:08:35.629 university hires a private company to manage 00:08:35.629 --> 00:08:38.169 its entire IT infrastructure or its security 00:08:38.169 --> 00:08:41.230 forces, the person working those jobs is in a 00:08:41.230 --> 00:08:43.149 tough spot. Even though they're on campus every 00:08:43.149 --> 00:08:45.110 day. Exactly. Even though they're physically 00:08:45.110 --> 00:08:47.429 on campus wearing a uniform that might say university 00:08:47.429 --> 00:08:50.950 security, they're actually employed by the private 00:08:50.950 --> 00:08:53.789 contracting firm. And unless that private firm 00:08:53.789 --> 00:08:57.669 itself is also a 501c3 entity, which is rare, 00:08:57.889 --> 00:09:00.679 that employment does not count. So it's about 00:09:00.679 --> 00:09:02.980 who signs the paycheck. It's all about who signs 00:09:02.980 --> 00:09:05.379 the paycheck. The payment source matters, not 00:09:05.379 --> 00:09:08.279 the location or the nature of the work. It's 00:09:08.279 --> 00:09:10.340 a crucial distinction. And we see this play out 00:09:10.340 --> 00:09:12.559 very clearly in highly specialized government 00:09:12.559 --> 00:09:14.279 contracts like at the national laboratories. 00:09:14.379 --> 00:09:16.700 Absolutely. Many Department of Energy or National 00:09:16.700 --> 00:09:19.259 Nuclear Security Administration labs are actually 00:09:19.259 --> 00:09:21.960 managed by massive private universities or corporations. 00:09:22.340 --> 00:09:24.620 The scientists and engineers working there are 00:09:24.620 --> 00:09:27.419 often providing essential mission critical public 00:09:27.419 --> 00:09:30.059 service. But their paychecks come from the private 00:09:30.059 --> 00:09:33.250 manager. Precisely. Yeah. So if they are employed 00:09:33.250 --> 00:09:36.509 by the managing entity, say a huge private university, 00:09:36.809 --> 00:09:39.129 that university has to independently qualify 00:09:39.129 --> 00:09:43.789 as a 501c3 for the employment to count. But if 00:09:43.789 --> 00:09:46.830 the lab is managed by a private for -profit aerospace 00:09:46.830 --> 00:09:50.210 or energy company, the employees are immediately 00:09:50.210 --> 00:09:52.629 disqualified. Despite serving a core government 00:09:52.629 --> 00:09:54.789 function. That's right. And that feels like a 00:09:54.789 --> 00:09:56.929 technical barrier that really goes against the 00:09:56.929 --> 00:09:59.230 spirit of the law, which was to reward commitment 00:09:59.230 --> 00:10:02.940 to the public good. It does. But legally, that 00:10:02.940 --> 00:10:05.820 barrier is ironclad under the current statute. 00:10:06.200 --> 00:10:08.539 And it leads us to the critical administrative 00:10:08.539 --> 00:10:11.539 requirement, the need for the employment certification 00:10:11.539 --> 00:10:14.539 form. Yes. You cannot afford to wait 10 years 00:10:14.539 --> 00:10:16.940 and just hope you qualified. Why is this certification 00:10:16.940 --> 00:10:19.919 form so vital? It is your insurance policy. This 00:10:19.919 --> 00:10:21.779 form is what you submit to the Department of 00:10:21.779 --> 00:10:24.360 Education's contractor, which is currently MOHELA. 00:10:24.480 --> 00:10:27.100 And they use it to determine if your employer 00:10:27.100 --> 00:10:29.220 and your employment qualify. And you shouldn't 00:10:29.220 --> 00:10:32.960 just do this once. Never. We strongly urge every 00:10:32.960 --> 00:10:35.539 listener, particularly those who are new to PSLF, 00:10:35.620 --> 00:10:38.909 to submit this form annually Every single time 00:10:38.909 --> 00:10:41.750 you change jobs. Why that often? Because if the 00:10:41.750 --> 00:10:44.529 servicer rejects your employer, you want to find 00:10:44.529 --> 00:10:48.049 out on day 36, not on day 3600. Without that 00:10:48.049 --> 00:10:50.330 regular certification, you have no recourse if 00:10:50.330 --> 00:10:52.830 10 years down the line, a record is disputed 00:10:52.830 --> 00:10:55.450 or a definition changes. It's your paper trail. 00:10:55.590 --> 00:10:58.269 That covers the qualifying employer. Now let's 00:10:58.269 --> 00:11:02.509 shift our focus to the what? What loan types 00:11:02.509 --> 00:11:05.769 actually qualify under PSLF? Because, again, 00:11:05.850 --> 00:11:07.870 it turns out not all federal loans are treated 00:11:07.870 --> 00:11:09.860 equally. And this is the second great hurdle 00:11:09.860 --> 00:11:13.320 that caused that 98 .5 % denial rate. The eligibility 00:11:13.320 --> 00:11:16.120 requirement is incredibly narrow. Only loans 00:11:16.120 --> 00:11:18.399 made under the William D. Ford Federal Direct 00:11:18.399 --> 00:11:20.700 Loan Program are automatically eligible. So what 00:11:20.700 --> 00:11:22.659 does that include? That includes your subsidized 00:11:22.659 --> 00:11:25.279 and unsubsidized Stafford loans, PLEOL -S loans, 00:11:25.480 --> 00:11:27.139 whether they're for parents or for grad students, 00:11:27.480 --> 00:11:29.679 and importantly, federal direct consolidation 00:11:29.679 --> 00:11:32.639 loans. Now, I know many of our listeners, especially 00:11:32.639 --> 00:11:36.440 those who took out loans before, say, 2010, still 00:11:36.440 --> 00:11:39.159 hold older forms. of federal debt. I'm thinking 00:11:39.159 --> 00:11:42.419 of the FFEL program, federal family education 00:11:42.419 --> 00:11:45.600 loan or federal Perkins loans. What's the pathway 00:11:45.600 --> 00:11:48.799 for them? The only pathway to eligibility for 00:11:48.799 --> 00:11:52.279 FFEL or Perkins loans is consolidation. They 00:11:52.279 --> 00:11:54.559 must be consolidated into a direct consolidation 00:11:54.559 --> 00:11:57.259 loan. Let me just repeat that. It's not an option. 00:11:57.399 --> 00:12:00.100 It is non -optional and non -negotiable. If a 00:12:00.100 --> 00:12:02.639 borrower makes 10 years of payments on an FFEL 00:12:02.639 --> 00:12:06.600 loan without first consolidating, those 120 payments 00:12:06.600 --> 00:12:10.240 are immediately and irrevocably disqualified, 00:12:10.500 --> 00:12:12.759 wiped out. And based on the litigation we've 00:12:12.759 --> 00:12:14.379 reviewed, this was a major point of confusion. 00:12:14.659 --> 00:12:16.860 Loan servicers were actively misleading borrowers 00:12:16.860 --> 00:12:18.799 about this consolidation requirement. They absolutely 00:12:18.799 --> 00:12:20.840 were. They were telling them that their FFEL 00:12:20.840 --> 00:12:23.220 loans were federal and therefore fine. Which 00:12:23.220 --> 00:12:24.899 is technically true. They are federal loans. 00:12:25.340 --> 00:12:27.559 It is, but they glossed over the distinction 00:12:27.559 --> 00:12:31.139 between general federal status and specific direct 00:12:31.139 --> 00:12:34.200 loan status. And that single piece of misinformation 00:12:34.200 --> 00:12:37.019 disqualified thousands of people who were doing 00:12:37.019 --> 00:12:39.279 public service on the assumption their loans 00:12:39.279 --> 00:12:41.600 were compliant. And we must also reiterate the 00:12:41.600 --> 00:12:44.220 obvious here. What about private loans? Private 00:12:44.220 --> 00:12:46.720 student loans, those issued by banks or private 00:12:46.720 --> 00:12:49.580 entities like Sallie Mae, are entirely ineligible. 00:12:49.740 --> 00:12:52.100 There's no ambiguity. They cannot be discharged 00:12:52.100 --> 00:12:55.000 under PSLF and they cannot be consolidated. into 00:12:55.000 --> 00:12:57.340 the direct loan program, full stop. So we've 00:12:57.340 --> 00:12:59.679 established the qualifying employer and the qualifying 00:12:59.679 --> 00:13:02.259 loan type. Now for the 120 payments themselves, 00:13:02.480 --> 00:13:05.379 we know they must be monthly and on time. But 00:13:05.379 --> 00:13:07.919 critically, they also have to be made under a 00:13:07.919 --> 00:13:11.059 specific family of repayment plans. Why are these 00:13:11.059 --> 00:13:13.559 plans mandatory? This is the technical distinction 00:13:13.559 --> 00:13:15.679 that really defines the cost and the utility 00:13:15.679 --> 00:13:18.620 of the entire program. The 120 payments must 00:13:18.620 --> 00:13:21.200 be made under one of the income -driven repayment, 00:13:21.200 --> 00:13:24.179 or IDR, plans. So that's income contingent repayment. 00:13:24.240 --> 00:13:27.299 Yes, ICR, income -based repayment, or IBR, pay 00:13:27.299 --> 00:13:28.759 -as -you -earn, which is pay -as -you -earn, 00:13:28.759 --> 00:13:30.759 or the revised pay -as -you -earn repay. It has 00:13:30.759 --> 00:13:32.799 to be one of those. Why can't a borrower just 00:13:32.799 --> 00:13:34.720 choose the standard 10 -year repayment plan? 00:13:34.899 --> 00:13:37.919 It seems simpler. Because the standard 10 -year 00:13:37.919 --> 00:13:41.059 repayment plan, by its very design, ensures that 00:13:41.059 --> 00:13:43.360 your debt is completely zeroed out after exactly 00:13:43.360 --> 00:13:46.360 120 payments. Ah, so there's nothing left to 00:13:46.360 --> 00:13:49.779 forgive. Exactly. The PSLF program is designed 00:13:49.779 --> 00:13:52.000 to forgive the remaining balance after you've 00:13:52.000 --> 00:13:55.259 made 120 qualifying payments. If your balance 00:13:55.259 --> 00:13:57.519 is zero because you successfully completed the 00:13:57.519 --> 00:14:00.200 standard 10 -year plan, There's nothing left 00:14:00.200 --> 00:14:02.940 to forgive. So the whole point of the IDR plans 00:14:02.940 --> 00:14:05.460 is to lower the payment. Yes. They intentionally 00:14:05.460 --> 00:14:08.220 lower your required monthly payment, pegging 00:14:08.220 --> 00:14:10.500 it to a percentage of your discretionary income, 00:14:10.720 --> 00:14:14.240 which ensures that even after 120 payments, a 00:14:14.240 --> 00:14:16.779 substantial, often enormous balance remains to 00:14:16.779 --> 00:14:19.159 be forgiven. This means if you start public service 00:14:19.159 --> 00:14:21.240 and just stick to the standard 10 -year plan, 00:14:21.480 --> 00:14:23.799 thinking you'll get forgiveness at the end, you 00:14:23.799 --> 00:14:25.720 are completely missing the entire mechanical 00:14:25.720 --> 00:14:27.950 point of the program. You are. You're just paying 00:14:27.950 --> 00:14:30.629 off your loan. You have to choose an IDR plan 00:14:30.629 --> 00:14:33.309 to maximize the forgiveness benefit. Moreover, 00:14:33.629 --> 00:14:36.549 payments made under things like extended or graduated 00:14:36.549 --> 00:14:39.789 repayment plans, which stretch payments out but 00:14:39.789 --> 00:14:42.070 aren't tied to your income, usually don't count 00:14:42.070 --> 00:14:44.210 either. That was another huge trap for early 00:14:44.210 --> 00:14:46.950 borrowers. There is one last tantalizing detail 00:14:46.950 --> 00:14:50.100 about the forgiveness itself. Unlike some other 00:14:50.100 --> 00:14:53.159 federal programs, PSLF currently has no cap on 00:14:53.159 --> 00:14:55.100 the amount forgiven. That is a critical incentive, 00:14:55.259 --> 00:14:58.100 especially for highly educated, high debt professionals. 00:14:58.519 --> 00:15:00.940 If a medical school graduate commits to working 00:15:00.940 --> 00:15:04.220 for a nonprofit hospital in a rural area and 00:15:04.220 --> 00:15:07.559 they have, say, $400 ,000 in debt. That entire 00:15:07.559 --> 00:15:10.639 remaining balance could just. Theoretically, 00:15:10.639 --> 00:15:12.840 yes. The entire remaining balance can be wiped 00:15:12.840 --> 00:15:14.960 out after 10 years of service. It's a massive 00:15:14.960 --> 00:15:17.139 financial benefit. Are there any tax implications? 00:15:17.700 --> 00:15:19.460 We should note that while the federal government 00:15:19.460 --> 00:15:22.379 does not tax PSLF forgiveness as income, there 00:15:22.379 --> 00:15:24.860 are some state -level exceptions. Mississippi 00:15:24.860 --> 00:15:26.700 is explicitly mentioned in our source material 00:15:26.700 --> 00:15:29.639 as a state that does tax PSLF forgiveness, which 00:15:29.639 --> 00:15:32.059 is a key detail for anyone living and working 00:15:32.059 --> 00:15:35.059 there. We have spent a good amount of time defining 00:15:35.059 --> 00:15:37.960 the rules. And in doing so, I think we've already 00:15:37.960 --> 00:15:40.480 uncovered exactly where the failure points lie. 00:15:40.899 --> 00:15:43.679 The confusion over loan types and people being 00:15:43.679 --> 00:15:45.899 on the wrong repayment plans. That's the core 00:15:45.899 --> 00:15:47.919 of it. Let's now move into the period of crisis. 00:15:48.460 --> 00:15:50.940 Because the sheer scale of those initial denial 00:15:50.940 --> 00:15:53.919 rates, it demanded congressional action. Oh, 00:15:53.919 --> 00:15:56.600 it had to. The initial data was truly staggering. 00:15:57.149 --> 00:15:59.289 When that first cohort of public servants began 00:15:59.289 --> 00:16:01.509 applying for forgiveness, starting in October 00:16:01.509 --> 00:16:04.789 2017, the numbers that came back suggested the 00:16:04.789 --> 00:16:06.929 system had completely broken down. And what were 00:16:06.929 --> 00:16:09.450 those first numbers? Of the first 28 ,000 public 00:16:09.450 --> 00:16:12.070 servants who applied, only 96 were approved. 00:16:12.350 --> 00:16:16.289 96. 96. That's a 99 % denial rate right out of 00:16:16.289 --> 00:16:18.210 the gate. That is a level of administrative failure 00:16:18.210 --> 00:16:20.899 that goes way beyond a small oversight. We have 00:16:20.899 --> 00:16:23.139 to ask, was this just because borrowers made 00:16:23.139 --> 00:16:25.639 mistakes or was the system itself fundamentally 00:16:25.639 --> 00:16:28.600 compromised? The evidence strongly suggests systemic 00:16:28.600 --> 00:16:31.460 compromise rooted in misinformation. While the 00:16:31.460 --> 00:16:34.019 rules were complex, the primary root cause identified 00:16:34.019 --> 00:16:36.519 by multiple government watchdogs and later in 00:16:36.519 --> 00:16:39.620 court was that the loan servicers, the companies 00:16:39.620 --> 00:16:41.700 managing the accounts like the predecessor to 00:16:41.700 --> 00:16:44.740 Mohilla, were providing false or misleading information 00:16:44.740 --> 00:16:47.340 to borrowers. So people were being told they 00:16:47.340 --> 00:16:49.799 were on the right track when they weren't. Constantly. 00:16:49.980 --> 00:16:51.960 Servicers frequently told borrowers that they 00:16:51.960 --> 00:16:54.360 were on a qualifying repayment plan or that their 00:16:54.360 --> 00:16:57.480 older FFEL loans were fine, without ever mentioning 00:16:57.480 --> 00:17:00.139 the mandatory step of consolidation into a direct 00:17:00.139 --> 00:17:02.120 loan. So we have thousands of people who were 00:17:02.120 --> 00:17:04.500 told, you're all set, just keep working, only 00:17:04.500 --> 00:17:06.180 to find out a decade later that none of their 00:17:06.180 --> 00:17:08.900 payments counted. Exactly. This left Congress 00:17:08.900 --> 00:17:11.440 with very little choice but to intervene. What 00:17:11.440 --> 00:17:13.799 was their first attempt at a legislative fix? 00:17:14.019 --> 00:17:16.619 The first major response came in March 2018. 00:17:17.339 --> 00:17:19.380 Congress passed the Temporary Expanded Public 00:17:19.380 --> 00:17:23.559 Service Loan Forgiveness Program, or TETPSLF. 00:17:23.700 --> 00:17:26.440 Another acronym. Another one. This program was 00:17:26.440 --> 00:17:29.019 essentially a targeted patch. It was designed 00:17:29.019 --> 00:17:31.680 specifically to catch those public servants who 00:17:31.680 --> 00:17:33.400 had satisfied the employment requirement and 00:17:33.400 --> 00:17:36.339 made 120 payments, but were denied only because 00:17:36.339 --> 00:17:38.660 they had chosen a non -qualifying repayment plan, 00:17:38.779 --> 00:17:41.279 like a graduated or extended plan, instead of 00:17:41.279 --> 00:17:43.299 an IDR plan. Okay, that sounds like it should 00:17:43.299 --> 00:17:45.259 have solved a pretty large chunk of the problem. 00:17:45.380 --> 00:17:48.470 Did it work? Tragically, no. The fix itself failed 00:17:48.470 --> 00:17:50.710 and failed massively, which just illustrates 00:17:50.710 --> 00:17:53.170 the deeper rot in the tracking system. Where 00:17:53.170 --> 00:17:55.089 do the numbers say? A government accountability 00:17:55.089 --> 00:17:58.910 office or GAO report documented the failure of 00:17:58.910 --> 00:18:02.910 54 ,184 public servants who applied for this 00:18:02.910 --> 00:18:08.509 TEPI -SLF fix. 53 ,523 were denied. So the fix 00:18:08.509 --> 00:18:10.450 had the same denial rate as the original problem? 00:18:10.529 --> 00:18:12.589 Pretty much. The mechanism of failure was subtle. 00:18:12.960 --> 00:18:15.299 Even though TEPI SLF forgave the repayment plan 00:18:15.299 --> 00:18:17.539 error, it still had to rely on the same flawed 00:18:17.539 --> 00:18:19.539 servicer accounting that couldn't accurately 00:18:19.539 --> 00:18:21.680 track payments or determine compliance in the 00:18:21.680 --> 00:18:24.099 first place. So it just led to another colossal 00:18:24.099 --> 00:18:26.839 wave of denials. If I'm a public servant who 00:18:26.839 --> 00:18:29.799 has now been through a PSLF denial and then a 00:18:29.799 --> 00:18:33.140 TEPI SLF denial, I'm left with the distinct feeling 00:18:33.140 --> 00:18:35.380 that the government made a promise it had no 00:18:35.380 --> 00:18:37.460 intention of keeping. Was there any financial 00:18:37.460 --> 00:18:39.779 relief offered at that point? Well, recognizing 00:18:39.779 --> 00:18:42.000 they were dealing with a massive failure caused 00:18:42.000 --> 00:18:43.599 by government administrators and contractors, 00:18:44.039 --> 00:18:46.160 the U .S. Department of Education announced a 00:18:46.160 --> 00:18:49.680 second chance plan in May 2018. A fix for the 00:18:49.680 --> 00:18:52.220 fix. Essentially, yes. Congress had set aside 00:18:52.220 --> 00:18:55.859 $350 million specifically for this purpose, a 00:18:55.859 --> 00:18:59.380 kind of fix it fund, to help people seeking reconsideration 00:18:59.380 --> 00:19:01.839 who were denied because of the wrong repayment 00:19:01.839 --> 00:19:04.099 plan. And how was that money distributed? It 00:19:04.099 --> 00:19:06.039 was distributed on a first come first serve. 00:19:05.930 --> 00:19:08.849 served basis. And while $350 million sounds like 00:19:08.849 --> 00:19:10.789 a lot of money, given the scale of the debt and 00:19:10.789 --> 00:19:13.329 the sheer number of denials, it offered only 00:19:13.329 --> 00:19:15.990 very limited relief and it ran out quickly. It 00:19:15.990 --> 00:19:18.410 was a temporary solution, not a systemic correction. 00:19:18.730 --> 00:19:21.349 Now, even as those legislative patches were being 00:19:21.349 --> 00:19:24.410 applied, the day -to -day realities of just dealing 00:19:24.410 --> 00:19:26.829 with the loan servicers continued to plague applicants. 00:19:27.150 --> 00:19:30.269 What specific ongoing issues are borrowers facing 00:19:30.269 --> 00:19:33.410 even now, primarily with the current contractor, 00:19:33.569 --> 00:19:36.680 Mohele? Ah, the list is long and it's persistent. 00:19:37.099 --> 00:19:41.299 We see incredibly long processing delays. Applicants 00:19:41.299 --> 00:19:43.819 report waiting three months or more after submitting 00:19:43.819 --> 00:19:46.339 certification forms, which is just unacceptable 00:19:46.339 --> 00:19:49.220 when the benefit hinges on precise timing. And 00:19:49.220 --> 00:19:51.910 it's not just delays. Not at all. Worse, there 00:19:51.910 --> 00:19:55.250 are repeated documented instances where servicers 00:19:55.250 --> 00:19:57.569 incorrectly inform people they do not qualify 00:19:57.569 --> 00:20:00.529 when they actually do. Automated messages containing 00:20:00.529 --> 00:20:02.769 wildly inaccurate payment counts are routine. 00:20:03.089 --> 00:20:05.890 So the system can't even count correctly? Apparently 00:20:05.890 --> 00:20:07.990 not. The Consumer Financial Protection Bureau, 00:20:08.190 --> 00:20:11.049 the CFPB, even issued formal warnings to the 00:20:11.049 --> 00:20:13.690 previous servicer, FedLoan, over these deceptive 00:20:13.690 --> 00:20:16.349 practices, which essentially confirmed the institutional 00:20:16.349 --> 00:20:18.529 failure. And even the tool that's designed to 00:20:18.529 --> 00:20:21.450 help seems to have his own technology. Yes, the 00:20:21.450 --> 00:20:23.890 Department of Education's own PSLF help tool 00:20:23.890 --> 00:20:26.089 has been reported to have these technical limitations. 00:20:26.549 --> 00:20:28.589 For instance, it sometimes won't allow people 00:20:28.589 --> 00:20:30.650 to select that they have successfully made over 00:20:30.650 --> 00:20:33.890 120 payments, which is the entire reason they're 00:20:33.890 --> 00:20:36.269 using the tool, forcing them to find awkward 00:20:36.269 --> 00:20:38.990 workarounds or submit forms with incomplete information. 00:20:39.369 --> 00:20:41.529 This is an ironic bureaucratic track. It's the 00:20:41.529 --> 00:20:44.210 perfect definition of one. And this whole context 00:20:44.210 --> 00:20:46.890 of systemic failure, servicer misinformation 00:20:46.890 --> 00:20:50.369 and technical roadblocks is what makes the Biden 00:20:50.369 --> 00:20:53.349 administration's corrective action in 2021 such 00:20:53.349 --> 00:20:56.349 a watershed moment. This was the temporary waiver. 00:20:56.490 --> 00:20:58.910 This was the true game changer that finally addressed 00:20:58.910 --> 00:21:01.309 the root causes of all these denials. What did 00:21:01.309 --> 00:21:03.329 it do differently? The temporary waiver, which 00:21:03.329 --> 00:21:06.250 was announced on October 6th, 2021, was truly 00:21:06.250 --> 00:21:08.329 revolutionary because it cut right through the 00:21:08.329 --> 00:21:10.410 two primary errors that had been disqualified. 00:21:24.540 --> 00:21:27.839 So it was an immediate acknowledgement that the 00:21:27.839 --> 00:21:31.230 system Not the borrower was at fault. Precisely. 00:21:31.369 --> 00:21:33.630 It forced the Department of Education to look 00:21:33.630 --> 00:21:36.269 back at the past decade, strip away all the servicer 00:21:36.269 --> 00:21:39.829 errors, and accurately credit those 120 payments 00:21:39.829 --> 00:21:41.970 for public servants who had held up their end 00:21:41.970 --> 00:21:44.210 of the bargain. This wasn't a small adjustment. 00:21:44.329 --> 00:21:46.829 It required a complete overhaul of their payment 00:21:46.829 --> 00:21:49.049 accounting systems. And the impact speaks for 00:21:49.049 --> 00:21:51.930 itself. What did that single temporary policy 00:21:51.930 --> 00:21:55.640 change? actually achieve? It was massive. As 00:21:55.640 --> 00:21:58.460 of March 2022, so just five months after the 00:21:58.460 --> 00:22:01.059 waiver was announced, 100 ,000 people had their 00:22:01.059 --> 00:22:04.279 loans canceled. Wow. Amounting to over $6 .2 00:22:04.279 --> 00:22:07.799 billion in student loan forgiveness. This success 00:22:07.799 --> 00:22:10.019 rate didn't just validate the complaints of all 00:22:10.019 --> 00:22:12.180 those denied borrowers, it reset the foundation 00:22:12.180 --> 00:22:14.819 of the program. It demonstrated its genuine, 00:22:14.839 --> 00:22:17.779 if previously untapped, potential. That is a 00:22:17.779 --> 00:22:21.289 staggering number. $6 .2 billion canceled for 00:22:21.289 --> 00:22:23.630 100 ,000 public servants in a matter of months. 00:22:24.170 --> 00:22:27.450 However, that figure also gives us pause. The 00:22:27.450 --> 00:22:29.490 government estimates that something like 1 .3 00:22:29.490 --> 00:22:32.150 million public servants qualify for PSLF. That's 00:22:32.150 --> 00:22:35.369 the estimate, yes. So while $6 .2 billion is 00:22:35.369 --> 00:22:38.789 immense, does that still feel like just a drop 00:22:38.789 --> 00:22:40.910 in the bucket compared to the total population 00:22:40.910 --> 00:22:43.009 that's eligible? It highlights the persistent 00:22:43.009 --> 00:22:45.660 gap. It shows the incredible power of the waiver, 00:22:45.799 --> 00:22:48.559 for sure, but it also confirms that even after 00:22:48.559 --> 00:22:51.079 this huge success, there are still hundreds of 00:22:51.079 --> 00:22:53.099 thousands, if not a million, public servants 00:22:53.099 --> 00:22:56.339 who either don't know they qualify, haven't completed 00:22:56.339 --> 00:22:58.920 the necessary steps, or are still just navigating 00:22:58.920 --> 00:23:02.059 the bureaucracy. The complexity remains incredibly 00:23:02.059 --> 00:23:04.539 high, and the sheer volume of debt still eligible 00:23:04.539 --> 00:23:07.019 for cancellation is a massive concern for fiscal 00:23:07.019 --> 00:23:09.819 planners. That gap, the promise versus the potential 00:23:09.819 --> 00:23:11.980 cost, brings us perfectly to our next section. 00:23:12.279 --> 00:23:14.740 Because what's fascinating here is that even 00:23:14.740 --> 00:23:16.960 as the government tries to fix the systemic flaws 00:23:16.960 --> 00:23:20.099 in PSLF, the program itself has been under constant 00:23:20.099 --> 00:23:22.500 attack from a policy perspective. Yes. It has 00:23:22.500 --> 00:23:24.759 been politically targeted almost since its inception, 00:23:24.960 --> 00:23:27.259 and that's regardless of which party was in power. 00:23:27.480 --> 00:23:30.380 The political volatility of PSLF stems directly 00:23:30.380 --> 00:23:32.640 from those cost estimates you just mentioned. 00:23:32.839 --> 00:23:35.240 Once the scale of potential forgiveness became 00:23:35.240 --> 00:23:37.740 clear, especially for professionals with high 00:23:37.740 --> 00:23:40.720 debt loads, proposals to curb the program became 00:23:40.720 --> 00:23:43.529 very frequent. And it's important to stress one 00:23:43.529 --> 00:23:46.269 thing about these proposals. Yes. Nearly all 00:23:46.269 --> 00:23:49.410 of them targeted new borrowers only. They acknowledged 00:23:49.410 --> 00:23:51.950 that it is nearly impossible, both politically 00:23:51.950 --> 00:23:55.269 and legally, to retroactively revoke a promise 00:23:55.269 --> 00:23:57.829 that's already been made to current public servants. 00:23:58.089 --> 00:24:00.690 OK, let's trace this political pressure. It even 00:24:00.690 --> 00:24:02.650 started under the Obama administration, right? 00:24:02.750 --> 00:24:05.849 It did. Back in 2015, President Barack Obama's 00:24:05.849 --> 00:24:09.250 budget proposed a cap on PSLF. The idea was to 00:24:09.250 --> 00:24:12.970 limit the amount of loan forgiveness to $57 ,500 00:24:12.970 --> 00:24:16.519 for all new borrowers. This signaled a very early 00:24:16.519 --> 00:24:18.599 concern over the long -term fiscal liability 00:24:18.599 --> 00:24:20.720 of the program. Especially for those high -debt 00:24:20.720 --> 00:24:22.859 borrowers like doctors and lawyers. Exactly. 00:24:22.859 --> 00:24:24.500 The ones who had received disproportionately 00:24:24.500 --> 00:24:27.079 large amounts of forgiveness. And that concern 00:24:27.079 --> 00:24:29.519 was then amplified significantly by Republicans 00:24:29.519 --> 00:24:32.619 in the subsequent years. Absolutely. The 2016 00:24:32.619 --> 00:24:35.400 Republican budget resolution proposed eliminating 00:24:35.400 --> 00:24:38.819 the PSLF program entirely for new student loan 00:24:38.819 --> 00:24:41.440 borrowers. And this theme continued very aggressively 00:24:41.440 --> 00:24:43.799 under the next administration. President Trump's 00:24:43.920 --> 00:24:46.440 budget proposals. Correct. President Donald Trump 00:24:46.440 --> 00:24:50.059 proposed eliminating PSLF in his 2018, 2019 and 00:24:50.059 --> 00:24:53.140 2021 budget proposals. The consistent rationale 00:24:53.140 --> 00:24:55.859 for all of these measures was fiscal responsibility. 00:24:56.259 --> 00:24:57.900 And there was also a significant legislative 00:24:57.900 --> 00:25:00.319 attempt which showed how serious Congress was 00:25:00.319 --> 00:25:02.480 about curbing the benefit. That was the Prosper 00:25:02.480 --> 00:25:05.180 Act. It was a Republican proposed bill that would 00:25:05.180 --> 00:25:08.720 have eliminated PSLF, again, only for new borrowers 00:25:08.720 --> 00:25:11.900 starting July 1st, 2019. This legislation advanced 00:25:11.900 --> 00:25:15.009 but was ultimately considered dead after Democrats 00:25:15.009 --> 00:25:16.789 regained control of the House of Representatives 00:25:16.789 --> 00:25:19.309 in 2019. But the driving force was always the 00:25:19.309 --> 00:25:22.000 same. Always. The impetus for all these proposals 00:25:22.000 --> 00:25:24.900 remains constant. The finding in a key GAO report 00:25:24.900 --> 00:25:27.200 that the cost of loan forgiveness had been severely, 00:25:27.200 --> 00:25:29.900 severely underestimated. So anytime there's a 00:25:29.900 --> 00:25:32.920 major policy discussion about student debt, PSLF 00:25:32.920 --> 00:25:34.819 is placed squarely on the chopping block for 00:25:34.819 --> 00:25:37.019 future participants. So we have bureaucratic 00:25:37.019 --> 00:25:39.819 errors leading to massive denials, and we have 00:25:39.819 --> 00:25:42.359 these continuous legislative threats aimed at 00:25:42.359 --> 00:25:44.880 curtailing the program. Now we have to turn to 00:25:44.880 --> 00:25:48.400 litigation. Specifically... the American Bar 00:25:48.400 --> 00:25:51.680 Association, the ABA case, which reveals this 00:25:51.680 --> 00:25:54.019 dangerous precedent of the government changing 00:25:54.019 --> 00:25:57.339 the eligibility goalposts mid -game. This case 00:25:57.339 --> 00:26:00.359 is a perfect microcosm of the chaos that public 00:26:00.359 --> 00:26:03.500 servants were facing. Starting in December 2016, 00:26:03.920 --> 00:26:06.799 a really critical issue arose. What happened? 00:26:07.130 --> 00:26:09.349 Certain employees who had been told, sometimes 00:26:09.349 --> 00:26:12.190 for years, that their jobs were eligible by the 00:26:12.190 --> 00:26:13.690 servicers and by the Department of Education 00:26:13.690 --> 00:26:16.930 were later told, retroactively, that their employers 00:26:16.930 --> 00:26:19.210 no longer qualified. Wait, they were told they 00:26:19.210 --> 00:26:20.869 were good and then the government changed its 00:26:20.869 --> 00:26:23.430 mind? That's exactly it. The Department of Education 00:26:23.430 --> 00:26:26.230 had quietly decided the specific types of employment, 00:26:26.329 --> 00:26:28.369 despite being for a qualifying employer like 00:26:28.369 --> 00:26:32.450 the ABA, are no longer PSLF eligible. This created 00:26:32.450 --> 00:26:34.740 incredible legal jeopardy, didn't it? I mean, 00:26:34.779 --> 00:26:36.680 people had committed years to public service 00:26:36.680 --> 00:26:39.720 based on official guidance. They had. And so 00:26:39.720 --> 00:26:42.680 the ABA and four individual plaintiffs sued the 00:26:42.680 --> 00:26:44.599 Department of Education over this retroactive 00:26:44.599 --> 00:26:47.799 denial. Their core argument was that the department 00:26:47.799 --> 00:26:52.059 had substantially changed its policy on PSLF 00:26:52.059 --> 00:26:55.279 eligible employers without following the proper 00:26:55.279 --> 00:26:57.720 legal procedure. Which would require public notice. 00:26:57.940 --> 00:27:00.559 Yes, which requires statutory public notice and 00:27:00.559 --> 00:27:03.460 comment periods. The ABA argued the department 00:27:03.460 --> 00:27:06.160 was just refusing to honor commitments that formed 00:27:06.160 --> 00:27:08.599 the entire basis of their careers. How did the 00:27:08.599 --> 00:27:10.839 federal court in New York react to the Department 00:27:10.839 --> 00:27:13.079 of Education's defense? The court's reaction 00:27:13.079 --> 00:27:15.700 was devastating to the department. On February 00:27:15.700 --> 00:27:18.460 22, 2019, the federal district court found the 00:27:18.460 --> 00:27:20.640 Department of Education's actions to be arbitrary 00:27:20.640 --> 00:27:23.079 and capricious. And that's a very specific legal 00:27:23.079 --> 00:27:25.859 term. It's a highly technical and damaging legal 00:27:25.859 --> 00:27:28.900 finding. It means the agency acted without a 00:27:28.900 --> 00:27:31.619 rational basis. The court ruled that the department 00:27:31.619 --> 00:27:33.599 failed to acknowledge it had changed its previous 00:27:33.599 --> 00:27:36.200 guidance, failed to provide a reasoned analysis 00:27:36.200 --> 00:27:39.660 for the denial, and, most crucially, failed to 00:27:39.660 --> 00:27:41.799 take into account the serious reliance interests 00:27:41.799 --> 00:27:44.339 affected by public servants who had structured 00:27:44.339 --> 00:27:46.700 a decade of their careers around this specific 00:27:46.700 --> 00:27:49.619 benefit. The court actually went so far as to 00:27:49.619 --> 00:27:52.019 classify the department's position on eligibility 00:27:52.019 --> 00:27:55.970 as nonsense. That's an unusually strong word 00:27:55.970 --> 00:27:59.089 choice for a judicial opinion. It speaks volumes 00:27:59.089 --> 00:28:01.569 about the court's frustration. It shows the judicial 00:28:01.569 --> 00:28:04.769 system saw this administrative confusion as deeply 00:28:04.769 --> 00:28:07.089 harmful and just fundamentally unfair to the 00:28:07.089 --> 00:28:09.470 plaintiffs. The ruling vacated the department's 00:28:09.470 --> 00:28:12.089 denial letters and mandated reconsideration. 00:28:12.289 --> 00:28:14.529 And that was a hugely significant ruling. It 00:28:14.529 --> 00:28:16.990 was because it laid the critical legal groundwork 00:28:16.990 --> 00:28:19.309 for other borrowers who were denied after receiving 00:28:19.309 --> 00:28:21.630 faulty governmental guidance to appeal their 00:28:21.630 --> 00:28:24.269 cases. So what was the final resolution of this 00:28:24.269 --> 00:28:26.230 major litigation? Did the Department of Education 00:28:26.230 --> 00:28:29.519 fight it? No. they chose not to appeal the ruling. 00:28:29.880 --> 00:28:32.980 They subsequently settled with the ABA, confirming 00:28:32.980 --> 00:28:36.420 that all full -time ABA employees are indeed 00:28:36.420 --> 00:28:39.579 employed in a public service job for a public 00:28:39.579 --> 00:28:41.859 service organization. But there was a catch. 00:28:42.059 --> 00:28:45.099 There was. And this is the critical caveat that 00:28:45.099 --> 00:28:48.309 defines the next political battle. The Education 00:28:48.309 --> 00:28:51.329 Department reserved the right to change the definition 00:28:51.329 --> 00:28:54.430 of a public service organization in new regulations 00:28:54.430 --> 00:28:57.049 in the future. So they lost the battle but kept 00:28:57.049 --> 00:28:59.849 the power for the war. Exactly. They acknowledged 00:28:59.849 --> 00:29:02.470 the court's finding of arbitrary action, but 00:29:02.470 --> 00:29:04.769 they did not surrender the future power of rulemaking. 00:29:05.029 --> 00:29:06.829 And that brings us right up to the most recent 00:29:06.829 --> 00:29:09.230 and highly charged regulatory changes in 2025. 00:29:10.140 --> 00:29:12.759 This shows us exactly why that department reservation 00:29:12.759 --> 00:29:15.220 of future rulemaking power mattered so much. 00:29:15.279 --> 00:29:17.799 It allows an administration to use the regulatory 00:29:17.799 --> 00:29:20.759 definition of public service as a political tool. 00:29:21.019 --> 00:29:23.880 Precisely. We are now talking about actions that 00:29:23.880 --> 00:29:26.480 directly leverage the definition of a qualifying 00:29:26.480 --> 00:29:29.599 employer to exclude certain organizations based 00:29:29.599 --> 00:29:31.900 on the political or social activities they conduct. 00:29:32.559 --> 00:29:36.200 On March 7, 2025, President Donald J. Trump issued 00:29:36.200 --> 00:29:40.099 Executive Order 14235. And the title was Restoring 00:29:40.099 --> 00:29:42.039 Public Service Loan Forgiveness. That was the 00:29:42.039 --> 00:29:44.339 title. What was the primary directive of this 00:29:44.339 --> 00:29:47.180 executive order regarding PSLF? The order directed 00:29:47.180 --> 00:29:50.240 the Secretary of Education to revise PSLF regulations 00:29:50.240 --> 00:29:53.119 to specifically exclude organizations engaging 00:29:53.119 --> 00:29:55.759 in activities deemed to have a substantial illegal 00:29:55.759 --> 00:29:58.680 purpose. The idea was to create a mechanism to 00:29:58.680 --> 00:30:01.440 strip PSLF eligibility from nonprofits whose 00:30:01.440 --> 00:30:03.640 work was deemed contrary to the administration's 00:30:03.640 --> 00:30:06.319 legal or political interpretations. And the executive 00:30:06.319 --> 00:30:08.680 order cited several types of activities as potentially 00:30:08.680 --> 00:30:11.500 disqualifying, right? It did. The order explicitly 00:30:11.500 --> 00:30:14.180 cited activities such as aiding illegal immigration, 00:30:14.519 --> 00:30:16.380 terrorism, child trafficking, discrimination 00:30:16.380 --> 00:30:19.339 and acts of civil disorder. As soon as the order 00:30:19.339 --> 00:30:21.700 was released, a lot of concerns arose regarding 00:30:21.700 --> 00:30:24.720 the ambiguous scope of substantial illegal purpose 00:30:24.720 --> 00:30:28.180 and the potential for disqualifying widely recognized 00:30:28.180 --> 00:30:31.299 legitimate nonprofit sectors. The final rules 00:30:31.299 --> 00:30:33.819 implementing this directive were then finalized 00:30:33.819 --> 00:30:37.000 in late 2025. What specific areas were cited 00:30:37.000 --> 00:30:50.539 in those finalized regulations? And we are reporting 00:30:50.539 --> 00:30:53.000 directly on the text of the finalized rules here, 00:30:53.099 --> 00:30:55.420 which were specifically aimed at two highly political 00:30:55.420 --> 00:30:57.880 areas. Which were? For instance, the regulation 00:30:57.880 --> 00:31:01.119 used specific, highly charged terminology referring 00:31:01.119 --> 00:31:03.299 to certain medical care for transgender youth 00:31:03.299 --> 00:31:06.000 as chemical castration, which is quoted directly 00:31:06.000 --> 00:31:08.220 from the executive summary of the rule. And it 00:31:08.220 --> 00:31:09.940 also targeted organizations organizations involved 00:31:09.940 --> 00:31:12.440 in aiding illegal immigration. So an organization 00:31:12.440 --> 00:31:15.079 like a legal aid society that's dedicated to 00:31:15.079 --> 00:31:18.279 providing representation for asylum seekers or 00:31:18.279 --> 00:31:20.859 a nonprofit hospital that provides medical care 00:31:20.859 --> 00:31:24.079 for transgender individuals. They could theoretically 00:31:24.079 --> 00:31:28.140 lose their PSLF qualifying status based on these 00:31:28.140 --> 00:31:55.970 new regulatory interpretations. That's a dramatic 00:31:55.970 --> 00:31:58.269 shift. It's a dramatic shift in the understanding 00:31:58.269 --> 00:32:00.799 of what constitutes. public service. It's important 00:32:00.799 --> 00:32:03.279 to clarify though that separate from these politically 00:32:03.279 --> 00:32:05.839 driven exclusions, the Department of Education 00:32:05.839 --> 00:32:07.900 was also working on administrative improvements 00:32:07.900 --> 00:32:10.460 aimed at just making the program function better. 00:32:10.809 --> 00:32:12.609 That's absolutely right. It wasn't all political 00:32:12.609 --> 00:32:15.730 warfare. The DOE -DE convened what are called 00:32:15.730 --> 00:32:19.329 negotiated rulemaking sessions in July of 2025 00:32:19.329 --> 00:32:22.890 specifically to address all this ongoing administrative 00:32:22.890 --> 00:32:25.769 confusion. And what came out of those? These 00:32:25.769 --> 00:32:29.609 sessions produced 15 significant consensus -based 00:32:29.609 --> 00:32:32.430 revisions. They were all aimed at simplifying 00:32:32.430 --> 00:32:34.690 the application and the eligibility tracking 00:32:34.690 --> 00:32:38.849 processes for PSLF regulations. And these are 00:32:38.849 --> 00:32:42.190 expected to be released. later in 2025, separate 00:32:42.190 --> 00:32:45.170 from the finalized political exclusions. So we 00:32:45.170 --> 00:32:47.089 see the program simultaneously being streamlined 00:32:47.089 --> 00:32:49.569 bureaucratically while being attacked and redefined 00:32:49.569 --> 00:32:51.250 politically. It's a perfect summary of the situation. 00:32:51.509 --> 00:32:53.309 This has been a whirlwind tour through a program 00:32:53.309 --> 00:32:55.670 that's defined by these deep structural contradictions. 00:32:55.890 --> 00:32:58.549 A brilliant promise that was ruined by bureaucratic 00:32:58.549 --> 00:33:01.670 failure, revived by executive action, and then 00:33:01.670 --> 00:33:03.730 immediately subjected to incredible political 00:33:03.730 --> 00:33:06.829 volatility. Yeah. As we wrap up this deep dive, 00:33:06.950 --> 00:33:08.890 let's just synthesize the primary tension points 00:33:08.890 --> 00:33:11.000 we've uncovered. I think the tension is rooted 00:33:11.000 --> 00:33:14.700 in the program's history of broken trust. PSLF 00:33:14.700 --> 00:33:18.079 is a program of immense promise, a true powerful 00:33:18.079 --> 00:33:21.279 incentive for public service. But it was immediately 00:33:21.279 --> 00:33:23.779 fraught with historic denial and bureaucratic 00:33:23.779 --> 00:33:26.799 confusion, primarily caused by service or error 00:33:26.799 --> 00:33:29.240 and governmental complexity around loan types. 00:33:29.480 --> 00:33:32.700 Yet the 2021 temporary waiver proved that the 00:33:32.700 --> 00:33:35.400 promise could be kept. It proved the program 00:33:35.400 --> 00:33:38.730 could work as intended. The fact that $6 .2 billion 00:33:38.730 --> 00:33:41.670 was canceled for 100 ,000 people demonstrates 00:33:41.670 --> 00:33:44.130 the capacity for large -scale relief when you 00:33:44.130 --> 00:33:46.450 remove those bureaucratic hurdles around loan 00:33:46.450 --> 00:33:49.190 type and payment plan. But the complexity inherent 00:33:49.190 --> 00:33:51.809 in diligent tracking and certification remains 00:33:51.809 --> 00:33:54.680 incredibly high. So what's the lesson? The lesson 00:33:54.680 --> 00:33:57.539 is that success for anyone pursuing PSLF requires 00:33:57.539 --> 00:34:00.279 militant focus. You must obtain direct loans, 00:34:00.480 --> 00:34:02.240 you have to select one of the income -driven 00:34:02.240 --> 00:34:04.519 repayment plans, and you have to diligently and 00:34:04.519 --> 00:34:06.720 regularly certify your employment. You can't 00:34:06.720 --> 00:34:09.539 just trust the servicer. You cannot rely on your 00:34:09.539 --> 00:34:12.059 servicer's advice. You have to assume you are 00:34:12.059 --> 00:34:14.940 responsible for monitoring your own compliance. 00:34:15.420 --> 00:34:18.519 But critically, you must do all of this while 00:34:18.519 --> 00:34:20.519 operating under the awareness of a constantly 00:34:20.519 --> 00:34:23.440 shifting regulatory environment. So what does 00:34:23.440 --> 00:34:25.940 this all mean for you, the listener, who might 00:34:25.940 --> 00:34:28.039 be considering public service or is maybe currently 00:34:28.039 --> 00:34:31.059 working in the field? What's the major takeaway 00:34:31.059 --> 00:34:34.519 from that ABA case and the 2025 regulatory changes? 00:34:34.840 --> 00:34:38.170 It means that you cannot rely on the of the program 00:34:38.170 --> 00:34:41.010 rules, especially the definition of your employer. 00:34:41.449 --> 00:34:44.010 The history of PSLF is a history of rule changes, 00:34:44.329 --> 00:34:46.809 legislative threats and governmental reservations 00:34:46.809 --> 00:34:49.969 of the right to change the definitions. The political 00:34:49.969 --> 00:34:51.989 definition of public service is proving to be 00:34:51.989 --> 00:34:54.130 as unstable as the bureaucratic administration 00:34:54.130 --> 00:34:56.690 of the loans themselves. That leads perfectly 00:34:56.690 --> 00:34:58.829 to our final provocative thought for you to consider 00:34:58.829 --> 00:35:01.789 long after this deep dive ends. Given the continuous 00:35:01.789 --> 00:35:04.110 legislative efforts dating back to the Obama 00:35:04.110 --> 00:35:07.210 administration and consistently advanced by Republicans 00:35:07.210 --> 00:35:11.050 to cap PSLF eligibility or eliminate. the amount 00:35:11.050 --> 00:35:13.489 of debt forgiven and considering the Department 00:35:13.489 --> 00:35:16.349 of Education's demonstrated ability, upheld by 00:35:16.349 --> 00:35:18.050 the courts in their settlement with the ABA, 00:35:18.230 --> 00:35:20.590 to change the definition of a public service 00:35:20.590 --> 00:35:23.769 organization via new regulations. The question 00:35:23.769 --> 00:35:26.929 is, what does this ongoing instability and the 00:35:26.929 --> 00:35:29.309 political weaponization of the qualifying employer 00:35:29.309 --> 00:35:32.409 definition mean for the long -term career planning 00:35:32.409 --> 00:35:34.670 and commitment of future public servants? Right. 00:35:34.750 --> 00:35:37.230 If the promise of relief, the very foundation 00:35:37.230 --> 00:35:39.750 of a decade -long professional commitment, can 00:35:39.750 --> 00:35:43.030 be retroactively revoked or just redefined every 00:35:43.030 --> 00:35:46.030 few years, does that risk undermining the entire 00:35:46.030 --> 00:35:49.230 purpose of PSLF? Does it dissuade highly indebted 00:35:49.230 --> 00:35:51.429 graduates from choosing those lower paying, critical 00:35:51.429 --> 00:35:53.909 public roles, forcing the government to find 00:35:53.909 --> 00:35:56.869 new, likely more costly ways to incentivize service? 00:35:57.329 --> 00:35:59.550 It's a question that defines the ongoing debate 00:35:59.550 --> 00:36:02.429 over the cost and execution and the very future 00:36:02.429 --> 00:36:04.590 of the public service loan forgiveness program. 00:36:05.039 --> 00:36:06.880 It's something to keep in mind as you commit 00:36:06.880 --> 00:36:09.320 the next decade of your professional life to 00:36:09.320 --> 00:36:11.659 serving the public. Thank you for joining us 00:36:11.659 --> 00:36:13.980 for this deep dive. We'll see you next time.