Twenty-two states have filed a lawsuit against the Trump Administration over a newly implemented rule that limits eligibility for the Public Service Loan Forgiveness (PSLF) program. The complaint, lodged in the US District Court for the District of Massachusetts, asserts that the administration lacks the authority to exclude certain employers from the PSLF program, which is designed to forgive federal student loans after ten years of qualifying payments made while employed in public service roles.
The lawsuit contends that the only legal exception for government positions under the PSLF program applies to members of Congress. Thus, the states argue that the exclusion of other government jobs, based on the administration’s claim of a “substantial illegal purpose,” is beyond the scope of the law. In their complaint, the plaintiffs describe the new rule as arbitrary and capricious.
Allegations Surrounding the New Rule
Under the PSLF program, public service jobs are defined as roles in government or non-profit organizations that qualify borrowers for student loan forgiveness after a decade of consistent payments. The recent rule prohibits forgiveness for borrowers employed by organizations deemed to have a “substantial illegal purpose.” This definition includes violations of federal immigration laws, support for terrorism, child abuse, discrimination, and breaches of state law.
The states argue that the administration’s interpretation of “substantial illegal purpose” is pretextual, allowing it to exercise what they describe as “unfettered discretion” in determining the legality of employers’ activities. This discretionary power, they assert, could be used to undermine lawful public service employment.
The new rule was established following an instruction from President Trump in March 2024, which directed the Department of Education to create these regulations. The administration has characterized the rule as “commonsense reform,” emphasizing that supporting illegal activities is contrary to the public good the PSLF program seeks to advance.
Response from States and Advocates
The states involved in the lawsuit express concern that the change will disproportionately affect employees in essential public service roles, including educators, healthcare workers, and social workers. They argue that the PSLF program is vital for attracting and retaining talent in these fields, especially in underserved communities.
Supporters of the PSLF program have criticized the new rule, fearing it may dissuade public service workers from pursuing careers in these essential areas. They argue that the program is crucial for alleviating the burden of student debt for those who dedicate their careers to public service.
As the case moves forward, the implications of this lawsuit could significantly impact the future of student loan forgiveness policies in the United States, particularly for those working in public service sectors.
