Political Crime and Corruption

Lawsuit filed against U.S. Department of Education over loan forgiveness eligibility

Trenton, NJ – Attorney General Matthew J. Platkin and 21 other attorneys general have filed a lawsuit against the U.S. Department of Education regarding its eligibility restrictions for the Public Service Loan Forgiveness (PSLF) program. The PSLF program allows federal student loans to be forgiven after a decade of public service.

The lawsuit challenges a recent federal rule that determines certain state governments or nonprofit organizations as ineligible employers for PSLF based on a vague standard involving “substantial illegal” activities. The coalition asserts that this broad interpretation unfairly targets specific states and organizations associated with ideologies disfavored by the administration.

Platkin criticized the new rule, claiming it represents an illegal attack on public servants who contribute significantly to their communities. The PSLF program, established in 2007, incentivizes individuals to work in public service fields, enabling over one million public servants to pursue careers that otherwise may not have been financially viable.

On October 31, the Department of Education finalized a rule allowing it to declare organizations ineligible for PSLF if the administration identifies them as having a substantial illegal purpose. The definition of illegality includes activities connected to immigration support, political protests, and gender-affirming healthcare, with the rule set to take effect in July 2026.

The coalition argues this vague authority could result in many public workers losing PSLF eligibility. Such changes would lead to staffing shortages and increased turnover in crucial public service jobs.

The lawsuit asserts that the new rule is unlawful and contravenes existing PSLF regulations, which guarantee forgiveness for those in qualifying public service roles. The attorneys general seek a court ruling declaring the rule invalid and halting its implementation.

Joining Platkin in this legal action are the attorneys general of New York, Massachusetts, California, and Colorado, along with others from across the country. A group of local governments and private plaintiffs is also filing a separate lawsuit to challenge the new rule.