Update on Public Service Loan Forgiveness for 1099 Contractors

The Issue

Our Report highlights the many financial pressures faced by attorneys throughout the Commonwealth. Student debit is one of them. Fortunately, attorneys who pursue public service practice and are employed by a non-profit (or otherwise qualifying agency), may be able eligible for loan forgiveness through the Public Service Loan Forgiveness statute. However, a large group of attorneys in Massachusetts, private bar advocates or counsel, who provide representation in cases in which an indigent person has a constitutional or statutory right to representation, are not eligible for loan forgiveness despite their providing the same public services for the same needy populations as attorneys employed by the Committee for Public Counsel Services (CPCS) as well as other public service organizations.

Our Report shed some light on this issue, but it has since been drawn out further through a recent pilot loan assistance program. Through that program, we provided student loan education and financial coaching to lawyers. This particular issue among private bar advocates and counsel continues to be a focal point of many attorneys’ concerns.

Outreach to U.S. Department of Education

After meeting with a variety of student loan experts and advocates, we drafted a letter to the Biden Education Transition Team to request that the new Secretary of Education pursue a negotiated rule making process on Public Service Loan Forgiveness to redefine qualifying public service employment more broadly. Our position is that the resulting regulations should allow workers performing a statutory public service function full-time, such as public interest law services, under the direction of a qualified public service employer, such as CPCS, to participate in Public Service Loan Forgiveness. (Note that while our focus was the large group of private counsel for CPCPS, other attorneys that contract for public services work might also be eligible). You can view that letter, here.

Several other organizations, including AccessLex Institute, also sent letters to the U.S. Department of Education (ED) in early 2021 alerting them to the ineligibility of some public service workers, including public defenders, who are not employed directly by the government or an eligible non-profit. The Coalition to Preserve PSLF also included this issue in a letter it sent to ED in 2021 highlighting its policy priorities and requesting a meeting with ED officials. ED did not respond to the letter or meeting request.

Negotiated Rulemaking

In Summer 2021, the Biden Administration announced that it would undertake negotiated rulemaking to change the rules pertaining to several student loan and repayment programs, including PSLF. AccessLex, as well as other organizations, submitted written and oral comments that identified the ineligibility of certain public service workers as an issue that needed to be fixed in the rulemaking.

During the negotiated rulemaking sessions in Fall 2021, one of the negotiated rulemaking committee members raised this issue with ED and proposed ways in which it could be fixed. ED staff said that they did not want to open up PSLF eligibility to workers who were not directly employed by the government or an eligible non-profit organization because they were worried about implementation and crafting too broad a rule and potentially granting PSLF to workers who should not be eligible.

Rulemaking Comments

ED released their proposed rules in July 2022 and invited the public to comment. The SJC Standing Committee on Lawyer Well-Being organized an effort by multiple stakeholders to submit comments in support of explained PSLF to eligible 1099 contractors. As a result, CPCS submitted its own comment as well as supporting letters from legislators, and comments from District Attorney Offices across the Commonwealth. The SJC Standing Committee drafted a comment on behalf of bar associations in the Commonwealth, which you can view, here.

Expected Rule Release

We expect the ED to release the final rules by November 1, 2022 which will take effect no later than July 1, 2023.