Updated at 1:09 p.m. ET
Debbie Baker thought she qualified for a federal program that helps teachers such as her, as well as nurses, police officers, librarians and others. The Department of Education program forgives their federal student loans if they make their payments for 10 years and work in public service.
For 10 years, Baker, who was a public school teacher in Tulsa, Okla., checked in with loan servicing companies and was told she was on track.
"I said, 'I'm qualifying for public service loan forgiveness,' and they said, 'OK, great,' " she says.
But it turns out that her $76,000 in student loans didn't get forgiven. Baker was finally told she was in the wrong type of loan. If she'd known that at the beginning, she could have switched loans and ended up qualifying. But she says nobody ever told her.
"When this hit ... I didn't know whether to cry, throw up, get mad," she says. "I honestly did not think the federal government would do this to someone."
Now, Baker is a plaintiff in a lawsuit being brought by one of the biggest teachers unions in the country against the Department of Education. The suit alleges the loan forgiveness program for millions of public service workers is in such a shambles that it violates federal law and the Constitution.
The American Federation of Teachers filed the lawsuit Thursday in federal court. In the complaint obtained by NPR, the union is asking the court to order the department to fix the Public Service Loan Forgiveness program so that it meets legal standards. It's also asking the department to come up with an appeals process for people who believe they have been treated unfairly.
Congress created the program more than a decade ago to encourage public service. So, if you make loan payments for 10 years and you work in a qualifying job for the government or a nonprofit, the program promises to forgive the remainder of your federal student loan debt.
That promise sounded really good to a lot of people. More than 1 million have filed official paperwork to take part in the program. But there's a problem.
"The promise is broken, virtually all the time," says Randi Weingarten, the president of the American Federation of Teachers. "This is a debacle."
Plenty of consumer watchdogs agree.
"The Department of Education just cannot seem to get this right," says Christopher Peterson, a law professor at the University of Utah and a former top attorney at the Consumer Financial Protection Bureau. "They keep making mistakes and are not appropriately administering this program that Congress has created."
By the department's last count, only 1% of the people who think they've made their 10 years of payments and apply for loan forgiveness are getting approved.
If you took all the people getting rejected and got them together in one place, Peterson says, you'd have "football stadiums full of nurses, firefighters, teachers, law enforcement officers that are seeking to have their debts forgiven."
He says they've made "all of these payments under the impression that they were on track, and now they're being turned away in droves."
As happened with Debbie Baker, if a student loan borrower is in the wrong type of loan, or the wrong type of repayment plan, they can't qualify for loan forgiveness.
There are different kinds of federal loans and a wide array of payment plans. If a student loan borrower is told they need to switch from one type to the other to qualify for the program, that's easy enough to do. For public service loan forgiveness, borrowers need to have a "direct federal loan." But if their loan servicer never tells them that, they can remain in the wrong type of loan or plan for years, thinking they're making progress toward loan forgiveness only to find out later that none of those payments counted towards forgiveness.
The teachers union lawsuit alleges that the Department of Education "knows of — but completely disregards — repeated misrepresentations made by [student loan] servicers to borrowers who are attempting to qualify ... resulting in unwarranted denials of loan forgiveness."
In other words, people like Baker aren't given the right information or advice, and many end up in the wrong types of loans or repayment plans and get unfairly disqualified. Government reports and investigations have found similar problems with borrowers getting bad information.
The lawsuit also alleges that loan servicers are having trouble keeping track of the number of qualifying payments people make — even when they are in the correct loan and payment plan and manage to do everything right.
Weingarten says the program is hurting the very people it's supposed to help. "It is so broken, it is so unfair that it violates our basic United States Constitution requirement of due process," she says.
Another problem with borrowers getting rejected after many years of thinking they were on track is that many make life decisions based on the expectation of loan forgiveness.
Janelle Menzel is a high school math teacher in Brainerd, Minn. She says people would ask her: "You have a degree in math, why are you teaching?" She says they would tell her she could make "so much more money in the private sector."
Menzel says she loves teaching. And she thought she was going to get her student loans forgiven, so financially she decided it made sense. "Oh yeah, definitely. That was a factor in it," she says.
But Menzel says that after 10 years of making payments, she was told by her loan servicer that she was in the wrong type of payment plan and couldn't qualify.
If a call center worker had told her that 10 years before, she easily could have switched into the right kind of loan. But she says nobody ever told her. And so that never happened.
She remembers after contacting her loan servicer repeatedly, trying to find a way to appeal, a call center worker told her, "Look, you just need to give up."
"And I remember sitting at the table watching my kids running around and playing and just thinking, man, I am stuck with this now," Menzel says. Thoughts of "the freedom that would come with being released of the student loan debt kind of came crashing in in that moment," she adds.
Congress passed a partial fix, called Temporary Expanded Public Service Loan Forgiveness, that was designed to help at least some borrowers. But the teachers union lawsuit alleges the Department of Education "has mismanaged [that program] as well." As of March 2019, only 3.6% of applications for that new program have been approved.
The Department of Education says it can't comment on ongoing litigation. But the department's press secretary, Liz Hill, said in a statement to NPR on Thursday, "the Department has improved internal processes and enhanced communications and outreach to borrowers." As an example, Hill pointed to an automated PSLF Help Tool that assists borrowers in determining whether they are in the right types of loans and payment plans, and which forms to submit.
She also pointed to a department blog post about avoiding common mistakes.
The teachers union is asking the court to order a new appeals process through which the department could use its power to forgive or "discharge" loans for borrowers who were treated unfairly.
But in its statement, the department says it "expects few people to be immediately eligible for a loan discharge under the Public Service Loan Forgiveness (PSLF) Program due, in large part, to complexities of the program Congress created more than a decade ago."
For those borrowers interested in the program, the Education Department says submitting an Employment Certification Form annually is key to making sure that borrowers are on track to qualify for forgiveness.
Navient, one of the nation's largest loan servicer companies, is not commenting on the lawsuit. But the company said in a statement to NPR, "We understand the frustration borrowers face in navigating a complex federal loan program, which is why we consistently advocate for policy reforms to simplify the system."
The Department of Education recently implemented a dramatic fix to a different program, TEACH Grants, that's now returning grant money to thousands of people who had grants taken away unfairly.
NPR is looking for people who have had problems qualifying for the Public Service Loan Forgiveness program. Share your story in the form here.
RACHEL MARTIN, HOST:
And now an NPR exclusive story. One of the biggest teachers' unions in the country is suing the U.S. Department of Education. The suit alleges that a program designed to help millions of public service workers is in such disarray that it's illegal. NPR's Chris Arnold obtained a copy of the complaint, which was filed in court this morning. And he has this report.
CHRIS ARNOLD, BYLINE: The program's designed to encourage people to work in public service. That's either government or nonprofit work, so nurses, police officers, librarians, teachers - all kinds of other jobs. Congress said more than a decade ago that, basically, if you make your loan payments for 10 years and you work in public service, the program will forgive the rest of your federal student loan debt. That sounds like a really good deal to a lot of people, and more than a million have filed official paperwork for the program. But...
CHRISTOPHER PETERSON: The Department of Education is - just cannot seem to get this right. They keep making mistakes and are not appropriately administering this program that Congress has created.
ARNOLD: That's Christopher Peterson. He's a law professor at the University of Utah and a former top attorney at the Consumer Financial Protection Bureau. And he may be understating things. Here's a number that you need to know - 1%. By the Education Department's own count of the people who think they've made their ten years of payments, and they apply for loan forgiveness, only 1% are getting approved. That means if you took all of the people getting rejected and got them together into one place, you'd have...
PETERSON: ...You know, football stadiums full of nurses, firefighters, teachers, law enforcement officers that are, you know, seeking to have their debts forgiven, having made all of these payments under the impression that they were on track, and are now - they're being turned away in droves.
ARNOLD: This has sparked a growing number of lawsuits, many against the loan servicing companies that manage student loans for the Department of Ed. But Peterson says this latest one ratchets up the pressure. Here's a teachers' union, representing 1.7 million members, suing the Education Department. Randi Weingarten is the president of the American Federation of Teachers, and she says this program is hurting the very people it's supposed to help. And it's so broken...
RANDI WEINGARTEN: ...So broken that it violates our basic United States Constitution requirement of due process, the basic fairness clause of the United States Constitution. And that is the core of this lawsuit.
ARNOLD: OK. So to understand what's going wrong here, we're going to zoom in on just one of the lawsuit's plaintiffs.
DEBBIE BAKER: OK. Well, my name is Debbie Baker. I'm actually a music teacher. I knew that I had the correct employment. I mean, good grief, I'm a public school teacher. Oklahoma teachers don't make that much money, and they certainly didn't then. And I thought, this is great.
ARNOLD: So back 10 years ago, Baker says she looked under student loan statements, called up that 800 number and said, I want to do this public service loan forgiveness thing. That's what the Department of Education tells people that they should do. That number connects you to a loan servicing company, which the government hires to advise people with student loans and collect their payments.
BAKER: I called them up, told them I heard about it. And they explained that basically, you went on a income-sensitive repayment plan, and that after you'd made 120 payments, you could apply for the program. So it was that easy.
ARNOLD: Baker says each year, she'd call back, do paperwork. And she'd say, I'm working towards public service loan forgiveness here. Is everything good?
BAKER: I said, I'm qualifying for public service loan forgiveness. And they said, OK, great.
ARNOLD: Over the years, she dealt with different loan servicing companies. One of them was Navient, one of the nation's biggest. And as the 10-year finish line approached, Baker was getting pretty excited. And right then, she didn't have a lot to be happy about. Her adult son, in his 20s, had been stricken with a degenerative disease.
BAKER: You know, he was living at home with us on full-time care. We were caring for him. We'd put my mother in a nursing facility. And so this was a bright spot. Like, this is going to be great.
ARNOLD: But that $76,000 in student loans did not get forgiven because in the end, Baker was told that she was in the wrong type of loan. And so none of her payments over the past years counted towards debt forgiveness. If somebody at the call centers would have just told her that 10 years before, she easily could have switched into the right kind of loan to qualify for forgiveness. But she says nobody told her, so that never happened.
BAKER: And when this hit, I just - I didn't know whether to cry, throw up, get mad - I just didn't know what to do. I honestly did not think the federal government would do this to someone.
ARNOLD: The union's lawsuit alleges that lots of other borrowers got bad information too and also that servicers aren't keeping good track of how many payments people are making that are supposed to count towards loan forgiveness. The loan servicer Navient said in a statement, quote, "we understand the frustration borrowers face in navigating a complex federal loan program, which is why we consistently advocate for policy reforms to simplify the system." The lawsuit from the teachers' union wants the court to take more immediate action. Christopher Peterson.
PETERSON: They're asking for a court to order the Department of Education to go back to the drawing board and try to redesign this program to make sure that the public, that teachers, but also firefighters, nurses, police officers - that they're going to get a reasonable opportunity to have their debts forgiven as they were promised by Congress.
ARNOLD: The Department of Education is not commenting on the lawsuit yet. The teachers' union is also asking for an effective appeals process for people who believe that they've been treated unfairly. We should note that the Department of Education recently implemented a dramatic fix to a different program. It's called the TEACH Grant Program. That's now returning grant money to thousands of people who had grants taken away unfairly.
Chris Arnold, NPR News.
(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.