States and cities challenge Trump policy overhauling public service loan
forgiveness
[November 04, 2025]
By COLLIN BINKLEY
WASHINGTON (AP) — More than 20 Democrat-led states are challenging a new
Trump administration policy designed to block nonprofit and government
workers from a student loan cancellation program if federal officials
determine their employer has a “substantial illegal purpose.”
The policy is aimed primarily at organizations that work with immigrants
and transgender youth.
In the lawsuit filed Monday in Massachusetts, the states argue the Trump
administration overstepped its authority when it added new eligibility
rules for the Public Service Loan Forgiveness program. The overhaul will
worsen job shortages and create instability in state workforces, the
suit said.
The legal challenge is being led by New York, Massachusetts, California
and Colorado. New York Attorney General Letitia James said the rule is
“a political loyalty test disguised as a regulation,” adding that it’s
“unjust and unlawful to cut off loan forgiveness for hardworking
Americans based on ideology.”
A separate coalition of cities, nonprofits and labor organizations also
filed a legal challenge in Massachusetts on Monday. That suit was
brought by Boston; Chicago; Albuquerque, New Mexico; San Francisco;
Santa Clara, California; and the National Council of Nonprofits.
Responding to the lawsuits, Under Secretary of Education Nicholas Kent
said it's unconscionable that the plaintiffs are standing up for
criminal activity.
“This is a commonsense reform that will stop taxpayer dollars from
subsidizing organizations involved in terrorism, child trafficking, and
transgender procedures that are doing irreversible harm to children,”
Kent said in a statement. “The final rule is crystal clear: the
Department will enforce it neutrally, without consideration of the
employer’s mission, ideology, or the population they serve.”
Another lawsuit challenging the rule is expected to be filed Tuesday on
behalf of the Robert F. Kennedy Human Rights advocacy organization, the
American Immigration Council and The Door, a legal group. They're being
represented by the groups Student Defense and Public Citizen.
[to top of second column]
|
The U.S. Department of Education building is photographed in
Washington, Dec. 3, 2024. (AP Photo/Jose Luis Magana, File)
Congress created the program in 2007 to steer more graduates into
lower-paying public sector jobs. It promises to forgive their
federal student loans after they make payments for 10 years while
working in government jobs or for many nonprofits. More than 1
million Americans have had their loans canceled through the program,
including teachers, firefighters, nurses and public defenders.
Under the new policy finalized last week, employers can be removed
if they engage in activities including the trafficking or “chemical
castration” of children, illegal immigration and supporting
terrorist groups. “Chemical castration” is defined as using hormone
therapy or drugs that delay puberty — gender-affirming care common
for transgender children or teens.
The education secretary gets the final say in determining whether a
group’s work has an illegal purpose, weighing whether the
“preponderance of the evidence” leans against them.
In their lawsuit, the states argue that entire state governments,
hospitals, schools and nonprofits could unilaterally be ruled
ineligible by the secretary. They say Congress granted the benefit
to all government workers, with no room for the Education Department
to add limits.
The states also object to the department’s reliance on the phrase
“substantial illegal purpose,” saying it’s an “overbroad and
impermissibly vague term” that is aimed “at chilling activities that
are disfavored by this Administration.”
The lawsuit asks a federal judge to declare the policy unlawful and
forbid the Education Department from enforcing it.
All contents © copyright 2025 Associated Press. All rights reserved |
