On November 3, 2025, Massachusetts Attorney General Andrea Campbell, New York Attorney General Letitia James, Colorado Attorney General Phil Weiser, and California Attorney General Rob Bonta led a coalition of 22 attorneys general in suing the U.S. Department of Education for unlawfully restricting eligibility for the Public Service Loan Forgiveness (PSLF) program, which allows government and nonprofit employees to apply to have their federal student loans forgiven after ten years of service.

In 2007, a bipartisan Congress created PSLF to encourage college graduates to work in the public sector, where salaries are often lower than at for-profit companies. The PSLF program enables public servants who work in eligible government and nonprofit roles to have their qualifying federal student loans forgiven after 10 years of qualifying service and payments. It helps public service employers recruit and retain skilled workers who might otherwise have little choice but to work in the private sector to afford to pay their student loans.

On October 31, 2025, the Department of Education finalized a new rule granting itself the power to unilaterally declare entire agencies or organizations ineligible for PSLF if the administration determines they have a “substantial illegal purpose,” which includes activities that support undocumented immigrants; provide gender-affirming health care to transgender youth; promote diversity, equity, and inclusion efforts; and engage in political protest. The vagueness of the rule empowers the Trump administration to target politically disfavored conduct and may threaten PSLF eligibility for organizations that are engaged in legal activities. The rule creates uncertainty as to who is an eligible employer and will deter student borrowers from entering public service. The resulting uncertainty of the rule will undercut the government’s and nonprofits’ ability to recruit and retain skilled employees.  The rule is scheduled to take effect in July 2026.

The attorney general coalition’s lawsuit argues that the Department of Education’s new rule is flatly illegal. The PSLF statute guarantees loan forgiveness for anyone who works full-time in qualifying public service; it does not grant the Department of Education discretion to carve out exceptions based on ideology. The coalition asserts that the rule’s vague “substantial illegal purpose” standard is arbitrary and capricious as it gives the Department of Education unfettered power to target specific state policies or social programs while exempting federal agencies from scrutiny.

For decades, the Public Service Loan Forgiveness program has enabled talented, service-minded individuals to build careers helping others – with the promise that their sacrifice would be honored with loan forgiveness. By changing the rules and punishing the very people who keep our communities running, the Trump Administration has shown once again that it chooses cruel ideology over fairness and the law.  Attorney General Andrea Campbell