More than 20 Democrat-led states have initiated legal proceedings against a recent policy from the Trump administration aimed at restricting student loan forgiveness to employees of nonprofits and government organizations deemed to have a substantial illegal purpose. The lawsuit, filed in Massachusetts, contends that the new eligibility guidelines for the Public Service Loan Forgiveness (PSLF) program overstep federal authority and threaten job stability across various sectors.
The states involved include New York, Massachusetts, California, and Colorado. New York Attorney General Letitia James criticized the policy, asserting that it serves as a political loyalty test disguised as a regulation that unfairly penalizes hard-working Americans based on ideology.
In addition to the states' challenge, a coalition of cities, nonprofits, and labor organizations—comprising Boston, Chicago, Albuquerque, and San Francisco—has also filed a separate lawsuit in Massachusetts.
Under Secretary of Education Nicholas Kent responded, stating, This reform will prevent taxpayer money from subsidizing organizations that engage in terrorism, child trafficking, and harmful procedures towards children. He argues that the regulation is applied neutrally, regardless of an organization's mission.
The PSLF program was established to facilitate graduates' entry into lower-paying public service roles by promising federal student loan forgiveness for qualifying payments over ten years. Recent policy revisions broaden the criteria for determining an organization's eligibility based on its activities involving child care and immigration.
As the lawsuit unfolds, concerns arise over the potential for significant impacts on public sector employment and the vagueness of the described substantial illegal purpose, prompting calls for urgent judicial review.
