(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.
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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.