Tens of thousands of public sector workers, including public school educators and nurses, may finally see a reduction in or elimination of their crushing burden of student debt thanks to a landmark settlement announced Oct. 13 between the U.S. Department of Education and the American Federation of Teachers (AFT).

The settlement resolves a lawsuit filed in July 2019 by the AFT and eight of its members — who said they were wrongly denied debt cancellation through the Public Service Loan Forgiveness (PSLF) program — against then-Education Secretary Betsy DeVos and the U.S. Education Department. The lawsuit alleged mismanagement of the program. The settlement will give public servants who have been denied loan cancellation a case review and credit for years of past payments.

“The AFT has fought hard for years to make PSLF work for the borrowers it was intended to help, and with this settlement we have ensured that a promise made is a promise kept,” AFT President Randi Weingarten said.

The settlement comes just a week after the Education Department’s Oct. 6 announcement of changes to the troubled program. Weingarten said the legally binding settlement gives “muscle and teeth” to President Biden’s temporary measures.

“Student loans were and continue to be one of the biggest problems that plague our entire membership,” UFT President Michael Mulgrew told the union’s Delegate Assembly on Oct. 13. “We’ve had people who were retiring after 25 years of service and still paying their student loans.”

The UFT has, over the past two and a half years, taken steps to help its members, creating a Student Debt Relief Program while working with the AFT, its national affiliate, to file the lawsuit.

Mulgrew said the union has already been in contact with its debt relief program lawyers and they are “quite happy” with the ruling. “So many of our members tried to do the right thing and were horribly screwed,” he told UFT delegates. “This is a big, big deal.”

Darimir Perez, a school counselor at MS 528 in Washington Heights who has about $74,000 in debt, said she cried when the AFT told her she was eligible for review as a result of the settlement.

Because her payments were interrupted while she was in a forbearance plan, Perez had been told she didn’t qualify for relief, something she has since discovered isn’t true.

“The AFT is guiding me and working with me to see how we can solve my situation,” said Perez, who has worked in city schools for more than 12 years.

Perez has twins who are in college. “To have kids in college and to have loans yourself, it’s difficult” she said. “Having one of my children transfer out of school because we couldn’t really afford it was hurtful for me because I worked so hard all these years to make sure they were top students. You want the best education for your child and to realize you can’t pay for it was very devastating.”

The eight members whose names were on the lawsuit will have their debt, estimated at nearly $400,000, erased completely. Tens of thousands of others whose applications for loan forgiveness were rejected by the Public Service Loan Forgiveness program prior to Nov. 1, 2020, will have their cases reviewed, as long as they had made 10 years of payments. Borrowers have until Oct. 30, 2022, to get those payments counted.

The settlement also requires the government to contact borrowers who may be eligible for the program so they can apply for relief. These detailed notices will inform borrowers how many payments remain before they qualify for forgiveness, how they can find out which payments are qualifying and whom to contact to receive guidance about how to obtain loan forgiveness.

The program, created in 2007 and open to government workers at all levels and employees of nonprofit groups, promised that college graduates who take jobs in public service can have their federal student debt forgiven after making 10 years of monthly payments. But fewer than 2% of applicants have received the relief. According to the AFT lawsuit, the Education Department routinely made errors while processing applications, but offered no appeals process, denying borrowers their right to due process.

As part of the settlement, the Education Department did not admit any wrongdoing or liability.