U.S. Department of Education Finalizes Controversial Public Service Loan Forgiveness Regulations

In late October, the U.S. Department of Education finalized public service loan forgiveness regulations that identified certain activities that were not in the “public interest” and so disqualified employees working for nonprofits engaged in them from loan forgiveness. For many reasons, including ones identified in comments on the proposed version of the regulations that I submitted with other exempt organizations professors, the regulations are controversial. Reflecting these concerns, the National Council Of Nonprofits filed a lawsuit challenging the final regulations almost immediately. The group’s reason for doing so is the final regulations allegedly unlawfully exclude certain nonprofits from the loan forgiveness program. Mores specifically, the complaint asserts claims under the Administrative Procedure Act and the Constitution that the regulations are:

• Count I: contrary to law and in excess of statutory authority
• Count II: arbitrary and capricious
• Count III: unconstitutional under the First Amendment (free speech)
• Count IV: unconstitutional under the Fifth Amendment (due process – void for vagueness)