Attorney General Neronha, coalition sue Trump Administration to block Public Service Loan Forgiveness restrictions

Attorney General Neronha, coalition sue Trump Administration to block Public Service Loan Forgiveness restrictions

Published on Monday, November 03, 2025

Attorney General Peter F. Neronha and 21 other attorneys general today filed a lawsuit against the U.S. Department of Education (ED) for unlawfully restricting eligibility for the Public Service Loan Forgiveness (PSLF) program, which allows government and nonprofit employees to have their federal student loans forgiven after 10 years of service.

The attorneys general are challenging a new federal rule that would deem certain state and local governments or nonprofit organizations ineligible employers for PSLF if the federal government determines they have engaged in actions with a substantial illegal purpose - in practice, activities, or actions that are disfavored by the administration. The coalition argues that the sweeping new rule is unlawful and targeted to punish states and organizations that the administration does not like.

"Public service knows no political party," said Attorney General Neronha. "In Rhode Island, more than 14,000 people wake up every day and serve the people of our state, regardless of political ideology or affiliation. Many of these state employees have student loan debt, and for some, the PSLF program provides life-changing financial relief in exchange for their dedication to serving their fellow Rhode Islanders. Here, this Administration is telegraphing that unless you serve his agenda, you're not performing public service, and therefore not eligible for the program. That's not acceptable, that's not legal, and that's not who we are as a country. Bending the knee to this President cannot and will not be a prerequisite for this program, and we will fight to ensure that politics remains untethered to what it means to be a public servant in America."

The PSLF program was established by Congress in 2007 to provide financial incentives to those who dedicate their careers to the service of others. The program forgives borrowers' remaining federal student loan debt after ten years of qualifying public service and consistent payments. Over the years, PSLF has enabled more than one million public servants to pursue careers that might have otherwise been out of reach. For state governments, PSLF is a critical tool to recruit and retain qualified professionals in vital fields like education, health care, and law enforcement.

On October 31, ED finalized a new rule granting itself the power to unilaterally declare entire agencies or organizations ineligible employers for PSLF if the administration determines they have a "substantial illegal purpose." The rule includes only a very limited definition of such "illegality," 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 rule is scheduled to take effect in July 2026.

The coalition warns that this vague new authority could have devastating consequences nationwide. Countless public workers could suddenly lose PSLF eligibility through no fault of their own. States could be forced to confront severe staffing shortages, higher turnover, and skyrocketing costs to maintain essential services.

The coalition's lawsuit argues that ED'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 ED discretion to carve out exceptions based on ideology. They assert that the rule's vague "substantial illegal purpose" standard is arbitrary and capricious as it gives the Department unfettered power to target specific state policies or social programs while exempting federal agencies from scrutiny.

The attorneys general are asking the court to declare the rule unlawful, vacate it, and bar the Department of Education from enforcing or implementing it.

Joining Attorney General Neronha in filing this lawsuit are the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Vermont, Washington, Wisconsin, and the District of Columbia.

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