Maryland Attorney General Anthony G. Brown and 21 other attorneys general filed a lawsuit against the U.S. Department of Education (ED) over a new rule affecting the Public Service Loan Forgiveness (PSLF) program.
The lawsuit challenges a federal rule that would allow ED to deem certain state or local government employers and nonprofit organizations ineligible for PSLF if the agency determines they have a “substantial illegal purpose.” The attorneys general argue that this term is narrowly and selectively defined and that the rule unlawfully restricts PSLF eligibility.
The PSLF program, created by Congress in 2007, provides forgiveness of remaining federal student loan debt after 10 years of qualifying public service employment and consistent payments. More than one million public servants have benefited from the program.
On October 31, ED finalized the new rule, which would take effect in July 2026. The rule allows the Department to exclude entire organizations from PSLF eligibility based on defined activities such as supporting undocumented immigrants, providing gender-affirming care to transgender youth, promoting diversity, equity, and inclusion, or participating in political protest.
The coalition argues the rule exceeds ED’s authority, as the PSLF statute guarantees forgiveness for individuals working full-time in qualifying public service roles and does not permit exclusions based on the nature of the employer’s work. They claim the rule is vague, arbitrary, and could cause public workers to lose eligibility, contributing to workforce shortages and higher costs for state and local governments.
The attorneys general are asking the court to declare the rule unlawful, vacate it, and prevent ED from implementing or enforcing it.
Attorneys general from Arizona, California, Connecticut, Colorado, Delaware, the District of Columbia, Hawaiʻi, Illinois, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, Washington, and Wisconsin joined the lawsuit. A group of private plaintiffs and local governments is also filing a separate lawsuit to block the rule’s implementation.
