A coalition of 22 states is suing the U.S. Department of Education, claiming a new rule unfairly limits who can qualify for federal student loan forgiveness under the Public Service Loan Forgiveness program.
The lawsuit challenges a regulation that would allow the department to label entire state agencies, schools, hospitals, and nonprofits as “illegal” based on activities the administration disapproves of — potentially stripping loan forgiveness from thousands of public workers.
Filed in federal court, the suit argues the policy turns a decades-old program for teachers, nurses, and other public servants into a political tool. The states say the rule’s vague language gives federal officials unchecked power to deny benefits to workers whose employers provide services like immigration support, diversity training, or gender-affirming care.
The attorneys general say the rule violates federal law by imposing new restrictions Congress never authorized. They’re asking the court to strike it down and block its enforcement before it takes effect in July 2026.
New York leads the multistate coalition, joined by California, Illinois, Michigan, Washington, and others, along with private plaintiffs and local governments.
Supporters of the suit say the change could leave millions of workers uncertain about whether their public service careers still qualify for loan forgiveness — undermining a program created to reward people who dedicate their lives to serving their communities.
FingerLakes1.com is the region’s leading all-digital news publication. The company was founded in 1998 and has been keeping residents informed for more than two decades. Have a lead? Send it to [email protected].