An Austin lawyer is suing the U.S. Department of Education for preventing borrowers from repaying their federal student loans based on their income.
Ashley Morgan, 35, has been enrolled in an income-driven repayment (IDR) plan for the last eight years but when she tried to recertify her income last month, she couldn't. She said that without warning the Education Department removed the income recertification forms and applications for IDR plans from studentaid.gov. As a result of losing access to this type of plan, she said, her monthly student loan payments more than quadrupled from $507 to $2,463.
"This lawsuit seeks to hold the Department of Education accountable for pulling the rug out from under a student loan borrower and removing her option to repay her loans pursuant to an income-driven repayment plan," Morgan's court filing states.
Morgan said she reached out to the Education Department, her loan service provider and her congressional representatives. She also filed written complaints with the Office of Federal Student Aid and the Consumer Financial Protection Bureau. When none of those options resolved the issue, she filed the federal lawsuit last week against the department and Secretary Linda McMahon.
Morgan's lawsuit argues that the department ran afoul of regulations it must follow by removing access to forms for IDR plans.
"By taking down the forms for recertifying income and for applying for income-based repayment, they have effectively stopped borrowers from being able to access any type of income-based repayment,” she said. “And that’s a violation of the duties that are set forth by Congress and the Higher Education Act.”
The Education Department halted access to income-driven repayment plans in February after a federal appeals court upheld a lower court ruling striking down the Biden-era Saving on a Valuable Education Plan. Eight million borrowers were on the SAVE Plan, but millions of others on different plans – like Morgan – have also been affected. Morgan's lawsuit argues the department is applying the Eighth Circuit's ruling on the SAVE Plan too broadly.
Since she started speaking out about the issue, Morgan said, she has heard from other borrowers in the same boat.
“I really appreciate the support that I’ve gotten from other people ... and it makes me glad that I’m fighting this fight,” she said. “Even if I lose, I feel like it’s worth trying to get things to be righted.”
The American Federation of Teachers, which has 1.8 million members, has also filed a federal lawsuit against the Education Department and McMahon for suspending income-driven repayment plans.
“By effectively freezing the nation’s student loan system, the new administration seems intent on making life harder for working people, including for millions of borrowers who have taken on student debt so they can go to college,” AFT President Randi Weingarten said in a news release.
The lawsuits come as the Trump administration continues its effort to dismantle the Education Department. Texas Republican leaders, including Gov. Greg Abbott and Lt. Gov. Dan Patrick, were in Washington, D.C., last week to attend the ceremony during which President Trump signed an executive order directing McMahon to take steps to close the federal agency.
While closing the agency would take an act of Congress, Trump has been able to whittle away its staff and power. Nearly half of the department’s employees have left or been laid off. The president also announced Friday that federal student loans would move from the Education Department to the Small Business Administration, which is, itself, undergoing staffing cuts.
“The SBA, they’re all set for it, they’re waiting for it," Trump said." It will be serviced much better than it has in the past. It’s been a mess."
The upheaval contributes to the uncertainty Morgan is facing.
“I really think what they’re doing with student loans is emblematic of their general 'break things first, ask questions later' kind of approach to everything,” she said. “This isn’t fair to people that rely on some kind of stability.”
Morgan said she has not been able to get clear answers from her loan service provider or the Education Department about what’s in store for borrowers like her.
“It’s just haphazard at best, and cruel and arbitrary at worst,” she said.
The lawsuit, she said, gives her a chance to fight back.
“The thing that helps me get through this is taking the awful feeling in the pit of my stomach and flipping that into a fire to fight for justice,” she said.
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