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States, unions sue Trump administration over loan forgiveness rule

A coalition of 22 state attorneys general and unions argue the new rule unlawfully excludes public service employers, affecting millions of federal student loan borrowers.

  • Two lawsuits filed by New York Attorney General Letitia James and allied unions challenge the U.S. Department of Education's updated Public Service Loan Forgiveness rule.
  • Originally, PSLF was framed as a bipartisan Congressional promise to support public-service careers, created to forgive student loans for government and nonprofit workers.
  • Joining James were attorneys general from 22 jurisdictions and major unions including AFT, AFSCME, NEA, the National Council of Nonprofits, cities, and immigrant-rights and legal aid groups.
  • Plaintiffs say the policy imposes an `ideological litmus test` on public servants and their employers, warning it could exclude state governments, hospitals, schools, and nonprofits from PSLF, affecting 40 million Americans with over $1.6 trillion in debt.
  • In October the Education Department said it was `rightsizing the program` to limit PSLF benefits to borrowers working for organizations with no `substantial illegal purpose`, but the coalition calls the change unlawful and James' office labeled it an `illegal attack`.
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States, unions sue Trump administration over loan forgiveness rule

(The Center Square) – A coalition of states led by New York Attorney General Letitia James and another coalition of teacher unions filed lawsuits against the Trump administration, alleging it violated federal law by excluding certain organizations from a student…

·Cherokee County, United States
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Watauga Democrat broke the news in Calhoun, United States on Thursday, December 11, 2025.
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