Cities Challenge Trump’s Public Service Loan Forgiveness Rule in Court

The Public Service Loan Forgiveness (PSLF) program was introduced by Congress in 2007. It was designed to alleviate federal student loan debts for individuals dedicated to a decade of service in the public sector. Recently, this program is at the center of a legal challenge involving multiple cities and labor unions.

Cities Challenge Public Service Loan Forgiveness Rule in Court

Cities including Albuquerque, Boston, Chicago, and San Francisco are suing the Trump administration over proposed modifications to the PSLF program. This legal action comes shortly after the U.S. Department of Education announced changes set to take effect on July 1, 2026, which may limit loan forgiveness eligibility for workers employed by organizations with a “substantial illegal purpose.”

Concerns Over New Rule

The new rule has raised concerns among public service workers. The definition of “substantial illegal purpose” will be determined by the education secretary, rather than the courts. Plaintiffs argue this could lead to local government employees being denied loan forgiveness if their employers oppose federal policies on issues like immigration or anti-diversity initiatives.

Details of the Lawsuit

• Filed in the U.S. District Court for the District of Massachusetts.
• Includes backing from the nation’s two largest teachers unions.
• Focuses on potential retaliation against local public employees for their governments’ political stances.

Boston Mayor Michelle Wu emphasized the significance of PSLF for cities’ workforce, stating that losing access could create staffing crises in vital public services.

Reactions from the Department of Education

Under Secretary of Education Nicholas Kent criticized the lawsuit, arguing it defends organizations involved in illegal activities. He asserted the rule seeks to prevent taxpayer dollars from supporting such organizations.

Key highlights of the proposed changes include:

• Defining activities that qualify as having a “substantial illegal purpose.”
• Possible exclusion from PSLF for employers engaged in illegal discrimination or violations of federal laws.

Implications for Public Service Workers

Over 1.1 million public service workers have benefited from loan discharges under PSLF. The plaintiffs assert the modifications conflict with congressional intent, which clearly defines eligible public service roles.

Opportunity for Legal Response

A coalition of 21 state attorneys general has also filed a lawsuit opposing the new rule. They express concerns about the potential for confusion and instability in the public workforce, fearing higher turnover and staffing shortages due to the proposed changes.

The outcome of this legal battle could significantly impact many public service employees across the United States. As the case unfolds, it underscores the ongoing tension between local governance and federal policy. The stakes are high for workers relying on PSLF to manage their student loan burdens.