Blue states, groups sue Education Department over Public Service Loan Forgiveness rule change

The attorneys general of 21 Democratic states and Washington, D.C., as well as a pair of advocacy groups, sued the Education Department on Monday over a recent rule change to the Public Service Loan Forgiveness (PSLF) student debt relief program.

The Trump administration finalized a rule change last week that said those who are engaged in what it called “unlawful activities” won’t qualify for student debt relief under the PSLF program, which allows government workers or nonprofit employees to receive forgiveness after 10 years of payments.

The administration defined “unlawful activities” as groups “abetting illegal immigration” or supporting gender transition for minors. The change is to go into effect next July.

The coalition of states is arguing the rule is unlawful and will be used to target President Trump’s political opponents.

“Public Service Loan Forgiveness was created as a promise to teachers, nurses, firefighters, and social workers that their service to our communities would be honored,” New York Attorney General Letitia James (D) said.

“Instead, this administration has created a political loyalty test disguised as a regulation. It is unjust and unlawful to cut off loan forgiveness for hardworking Americans based on ideology. I will not let our federal government punish New York’s public servants for doing their jobs or standing up for our values,” James added.

The states worry the rule will be used against “teachers in states with inclusive curricula, health professionals providing gender-affirming care, or legal aid attorneys representing immigrants, could suddenly lose PSLF eligibility through no fault of their own.”

The group suing is made up of New York, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, Washington, Wisconsin and the District of Columbia.

“It is unconscionable that the plaintiffs are standing up for criminal activity,” Under Secretary of Education Nicholas Kent said in a statement. “This is a commonsense reform that will stop taxpayer dollars from subsidizing organizations involved in terrorism, child trafficking, and transgender procedures that are doing irreversible harm to children.”

“The final rule is crystal clear: the Department will enforce it neutrally, without consideration of the employer’s mission, ideology, or the population they serve,” Kent added.

Another lawsuit against the PSLF change, led by Protect Borrowers and Democracy Forward, was also filed Monday, with other cities, two of the largest teachers’ unions in the country and advocacy groups joining the legal challenge.

Their lawsuit says the rule change is a “blatant violation of the Higher Education Act” and is asking a judge to strike it down.

“This administration has, yet again, unlawfully targeted people who work in the public interest. And so we again are in court,” said Skye Perryman, president and CEO of Democracy Forward. “Politically motivated retaliation, like what the administration has done here, should have no place in America. We are honored to represent this powerful coalition in defense of the people’s rights.”