Thousands of student-loan borrowers are getting a second chance at debt forgiveness after being 'cruelly denied' under Betsy DeVos

• The American Federation of Teachers reached a settlement with the Education Dept. on student-loan forgiveness.
• The settlement requires the department to revisit denied applications to the Public Service Loan Forgiveness program.

A week after the Education Department announced reforms to a program that forgives student debt for public servants like firefighters, teachers, and nonprofit workers after ten years of monthly payments, a teacher's union announced a victory that's taking those reforms a step further.

The American Federation of Teachers (AFT) announced on Wednesday that it reached a settlement with the Education Department on a 2019 case - Weingarten v. DeVos - to hold President Donald Trump's administration accountable for its mismanagement of the Public Service Loan Forgiveness (PSLF) program. The first borrowers who completed ten years of payments should have become eligible for debt forgiveness in 2017, but under Education Secretary Betsy DeVos, the program ran up a 98% denial rate, which continued into the beginning of President Joe Biden's term.

The settlement will require the Education Department to revisit the thousands of applications that were denied student-loan forgiveness. Specifically, it will require the department to:

• Reconsider, upon request, the application of any borrower who was denied forgiveness through PSLF, and those borrowers will now have an official process to submit those requests;
• Review, within 90 days from today, all PSLF applications denied prior to November 2020;
• And give borrowers with denied applications a detailed response as to why they were denied, and who they should reach out to with any questions.

"Congress pledged relief to those who dedicated their lives to serving the public, but 98 percent got a debt sentence instead," AFT President Randi Weingarten said in a statement. "Today is a day of vindication for the millions of borrowers who took the government at its word but were cruelly denied through no fault of their own."

The settlement will also completely discharge $400,000 in student debt for the eight plaintiffs in the case, who made their qualifying PSLF payments but got denied.

Last week, the Education Department announced an overhaul of PSLF that would implement a limited-time waiver through October 31, 2022, that will allow borrowers to count payments from any federal-loan programs or repayment plans toward loan forgiveness through PSLF, including programs and plans that were not previously eligible.

That waiver alone would bring 550,000 borrowers closer to student-debt relief automatically, and the department also said it would review denied applications before October of next year, which is not as expansive as Wednesday's settlement.

Insider reported earlier this month that if PSLF had continued on its current track, it might see minor improvements but still only approve 20% of borrowers for forgiveness by 2026; the department's overhaul, along with the settlement, will likely set borrowers on a much better track.

"This agreement unravels the Gordian knot of PSLF's implementation and shows the power of advocacy and collective action," Weingarten said. "It represents a game-changing victory for the millions of educators, nurses, public employees and other AFT members yoked to crushing monthly repayments that have upended their lives."