New York Attorney General Letitia James, Connecticut Attorney General William Tong and 20 other attorneys general have filed a lawsuit in U.S. District Court for the District of Massachusetts against the U.S. Department of Education and Linda McMahon in her official capacity as secretary of the Department of Education. McMahon used to be CEO of World Wrestling Entertainment (WWE) in Stamford.
The lawsuit alleges that the defendants 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 ten years of service.
The defendants put into effect a new federal rule that would make entire state governments, hospitals, schools, and nonprofit organizations ineligible for PSLF if the government unilaterally determines they have done things that the Trump administration doesn’t like. This can include support for immigrants, gender-affirming health care, or diversity programs.
The lawsuit argues that the new rule is not only unlawful but also politically motivated. It says the rule is intended to punish states and organizations that the administration does not like. The PSLF program was established by Congress in 2007.
“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,” James 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.”
On Oct. 31, the Department of Education finalized the new rule, which is scheduled to take effect in July of next year. James and the other attorneys general warn that entire classes of public workers such as teachers, health professionals or legal aid attorneys representing immigrants could suddenly lose PSLF eligibility through no fault of their own.
James points out that earlier this year, the U.S. Department of Justice sued New York over its “Protect Our Courts Act” – a state law ensuring that immigration enforcement does not deter people from seeking justice in state courts. Under the new PSLF rule, the attorneys general argue, the administration could claim that the “Protect Our Courts Act” constitutes a “substantial illegal purpose” and use it to deny loan forgiveness to thousands of New York public employees.
The attorneys general argue that the new rule is flatly illegal and that the law that created PSLF guarantees forgiveness for anyone who works full-time in qualifying public service. They note that the law does not grant the Department of Education to the power to make exceptions based on ideology nor the unfettered power to target specific state policies or social programs while exempting federal agencies from scrutiny.
The attorneys general are asking the federal court to declare the rule unlawful, vacate it, and bar the Department of Education from enforcing or implementing it.
In addition to James and Tong, the lawsuit was filed by the attorneys general of Arizona, California, Colorado, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, Washington, Wisconsin, and the District of Columbia.
