Cities sue over Trump’s new Public Service Loan Forgiveness rule : NPR

The cities of Albuquerque, N.M., Boston, Chicago and San Francisco are suing the Trump administration over modifications it plans to make to the favored Public Service Loan Forgiveness program, or PSLF.

The lawsuit, which additionally contains the nation’s two largest lecturers unions and the American Federation of State, County and Municipal Employees, comes lower than per week after the U.S. Department of Education published a rule change to PSLF.

Effective July 1, 2026, the division says the change will enable it to disclaim mortgage forgiveness to staff whose authorities or nonprofit employers interact in actions with a “substantial illegal purpose.” The job of defining “substantial illegal purpose” will fall to not the courts however to the schooling secretary.

PSLF was created by Congress in 2007, and signed by then-President George W. Bush, to cancel the federal pupil mortgage money owed of debtors who spend a decade working in public service, together with instructing, nursing and policing.

According to the lawsuit, filed Monday within the U.S. District Court for the District of Massachusetts, the plaintiffs worry {that a} metropolis or county authorities’s resistance to the administration’s immigration actions, for instance, or anti-DEI insurance policies, could lead on the secretary to exclude that authorities’s public staff from mortgage forgiveness. They fear {that a} native nurse or first responder might be denied mortgage forgiveness as a result of their native leaders defied the Trump administration.

The grievance argues the rule is “an attempt to target organizations and jurisdictions whose missions and policies do not align with [the Trump administration’s] political positions on immigration, race, gender, free speech, and public protest.”

“Politically motivated retaliation, like what the administration has done here, should have no place in America,” mentioned Skye Perryman, president and CEO of Democracy Forward, one of many organizations representing the plaintiffs.

The plaintiff group additionally contains the National Council of Nonprofits, which said in a statement upon the rule’s launch:

“Nonprofits operate food banks, serve veterans, assist domestic violence survivors, deliver meals to seniors, respond to disasters, and much more. Nonprofits must be able to identify and meet those needs without political interference, fear of retribution, or exclusion from a program designed to support their employees.”

Under Secretary of Education Nicholas Kent denounced the lawsuit.

“It is unconscionable that the plaintiffs are standing up for criminal activity,” Kent mentioned in a press release to NPR. “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.”

In response to plaintiffs’ considerations that the administration may use PSLF as a weapon to punish political opponents, Kent insisted “the Department will enforce [the rule] neutrally, without consideration of the employer’s mission, ideology, or the population they serve.”

The grievance says PSLF has allowed native governments to retain staff, together with legal professionals and engineers, who may earn extra within the personal sector. Albuquerque’s leaders say that dropping entry to PSLF “would likely create an untenable staffing crisis.”

In a press release, Boston Mayor Michelle Wu added: “The City is joining with cities, unions, and nonprofits across the country to protect a program that helps Boston’s workforce and millions of Americans in public service careers pay for college.”

What actions does the administration contemplate to be unlawful?

One key query raised by this rule change, and the lawsuit, is: How will the Education Department outline actions with “substantial illegal purpose”?

According to the rule itself, such actions may embrace:

• “aiding and abetting violations of Federal immigration laws”
• “supporting terrorism or engaging in violence for the purpose of obstructing or influencing Federal Government policy”
• “engaging in the chemical and surgical castration or mutilation of children in violation of Federal or state law”
• “engaging in the trafficking of children to another State for purposes of emancipation from their lawful parents in violation of Federal or State law”
• “engaging in a pattern of aiding and abetting illegal discrimination”
• “and engaging in a pattern of violating State laws.”

If the secretary determines that an employer has behaved with “substantial illegal purpose,” in line with the rule, the employer can both interact with the division and settle for a corrective motion plan or danger dropping entry to PSLF for its staff for 10 years.

In response to public feedback, the Education Department has said, “[it] would have no basis to remove eligibility from nonprofits engaged in work related to immigrant communities, LGBTQ+ individuals, or racial justice if those organizations are following the law.”

But the plaintiff cities, which sit on the U.S. Justice Department’s “sanctuary jurisdictions” record, say the Trump administration has already accused them of impeding the enforcement of federal regulation, and that this rule “represents yet another attack on politically disfavored local governments and nonprofits that have local laws, policies, and missions that are anathemas to the Administration.”

“The actions of these cities are legal,” says Persis Yu, of Protect Borrowers, one other group representing the plaintiffs. What’s extra, she says, “whether or not these activities are legal, is not a [determination] that the secretary of education has either the right or the expertise to be making.” 

The new rule is the end result of a presidential action, issued in March, by which President Trump accused the Biden administration of abusing PSLF, and mentioned this system “has misdirected tax dollars into activist organizations that not only fail to serve the public interest, but actually harm our national security and American values, sometimes through criminal means.”

What did Congress intend when it created PSLF?

The plaintiffs argue Congress was clear about what ought to qualify as “public service” when it wrote the regulation, and that this new rule goes in opposition to lawmakers’ intent.

“The Higher Education Act defines public service jobs as including government or a 501(c)(3) tax-exempt nonprofit organization. It does not provide any discretion or wiggle room within that definition,” Yu says. “Congress has said that this is who is entitled to public service loan forgiveness. The secretary doesn’t have the authority to change that.”

In response to public feedback, the Education Department has disagreed, writing that “[it] rejects the suggestion that this rule exceeds its legal authority. The [Higher Education Act] grants the Secretary explicit power to regulate title IV programs. PSLF is a title IV program, and its proper administration requires clear, enforceable standards.”

Another lawsuit was filed in tandem Monday, by a coalition of 21 state attorneys normal, arguing on behalf of Democratic-leaning state governments that fear their public staff may likewise be denied mortgage forgiveness due to state leaders’ selections to help immigrants, promote DEI or present gender affirming care.

The coalition of attorneys normal warned in a press launch that the rule would end in “widespread confusion, fear, and instability in the public workforce, forcing states to confront severe staffing shortages, higher turnover, and skyrocketing costs to maintain essential services.”

According to federal knowledge, greater than 1.1 million public service staff have to this point had their federal pupil mortgage money owed discharged beneath PSLF.

This story was up to date to incorporate remark from the U.S. Department of Education.