The Value of Forgiveness (of Student Loans)
By Meghan Droste, April 15, 2020
If you graduated well before 2007, or are among the lucky few who graduated since then without any student loan debt, Public Service Loan Forgiveness (PSLF) might not mean much to you.
If you’re a Millennial (those far more likely to have graduated from an undergraduate or graduate program with at least some debt), you are probably very familiar with the PSLF program and may be counting the payments until you can take advantage of it.
For those who have never heard of it, the PSLF program forgives the student loan balances of employees of government agencies and certain non-profits and not-for-profit organizations after they make 120 qualifying payments while working for a qualified employer (i.e. pay their loans for at least 10 years while in a public service position). The loan balance is forgiven rather than discharged, a very important distinction. For those who do not qualify for the PSLF program and have their loans discharged after 25 years of reduced payments based on income, the balance of the loan is considered taxable income. For those who receive loan forgiveness under the PSLF program, the balance simply goes away as a thank you for your public service. This might not seem like a huge difference, but having a discharged balance of more than $100,000 treated as income will make for a very noticeable tax liability.
Why am I explaining all of this to you? I promise, it’s not just so you have a better understanding of what those of us with student loan debt (thanks, law school) are facing. It’s so you understand the value of having the documentation to back up eligibility for the PSLF program (hint: it is extremely valuable). And why does that matter? Well, it helps explain why I find the Commission’s decision in Lazaro G. v. Department of Commerce, EEOC App. No. 0120181501 (Feb. 21, 2020), so interesting.
The back and forth between the agency, the complainant, and the Commission leading up to the Commission’s recent decision is a bit convoluted, but for our purposes can be distilled to the following: The complainant alleged that the agency discriminated against him when it did not select him as a patent examiner.
In its Final Agency Decision, the agency found in the complainant’s favor. As part of the damages he sought, the complainant requested employment certifications for the period of retroactive employment or reimbursement for the amount that would have been forgiven after 10 years of federal service.
The agency argued the complainant was not entitled to recover costs related to his loans for various reasons, including that he “did not prove any pecuniary losses related to the student-loan program was caused by the Agency’s discriminatory actions.”
In its decision, the Commission ordered the agency to determine whether the complainant would have received employment certifications for the PSLF had it selected him for a position in September 2012. If he would have, the Commission also ordered the agency to retroactively provide all of those certifications — in other words, truly placing him in the position he would have been in but for the agency’s discriminatory non-selection. If he would not have received the certifications, the Commission ordered the agency to determine whether the complainant had established that he is entitled to monetary compensation related to the PSLF program.
This might not seem like much if you don’t a large amount of student loan debt. However, I cannot stress enough how valuable more than six years of certifications can be to someone seeking forgiveness under the PSLF. Keep this in mind when making damages determinations or engaging in settlement discussions in cases involving retroactive instatement or reinstatement. [email protected]