(MARKET WATCH) – Too many student-loan borrowers are missing their chance to get the debt relief they deserve because Department of Education Secretary Betsy DeVos and her staff have botched the administration of a loan-forgiveness program, a new lawsuit charges.
A federal program allows teachers and certain government and non-profit workers to wipe away their student-loan debts if they fit the right criteria — most importantly, 10 years of repayment — but the lawsuit filed Thursday by a powerful teacher’s union and several borrowers alleges DeVos’ Education Department is engaging in “gross mismanagement.”
The Public Service Loan Forgiveness Program, a 2007 initiative that started accepted applications in 2017, has allowed loan forgiveness for a mere 518 borrowers applications out of the 73,554 applications it has received as of late March, according to Education Department data.
The American Federation of Teachers’ lawsuit attributes the less than 1% success rate to the department’s alleged failure to correctly review the loan-forgiveness applications. The department is also disregarding how student-loan servicers are misrepresenting eligibility rules to borrowers, according to the lawsuit filed in Washington D.C. federal court.