New York Attorney General Letitia James said a federal judge has permanently blocked a Trump administration rule that would have restricted eligibility for the Public Service Loan Forgiveness program.
The ruling prevents the U.S. Department of Education rule from taking effect after James and a coalition of attorneys general challenged it in court.
James said the rule would have allowed the administration to deny loan forgiveness to public servants whose employers were not aligned with the administration's ideology.
"Public servants should not have to pass a political loyalty test to earn the loan forgiveness they were promised," James said in a statement. "This rule was a blatant attempt to punish teachers, nurses, firefighters, social workers, and other public servants for working in states or for organizations that this administration does not like."
The Public Service Loan Forgiveness program allows government and nonprofit employees to have federal student loans forgiven after 10 years of qualifying public service.
James' office said the challenged rule would have allowed the federal administration to deem state governments, hospitals, schools and nonprofit organizations ineligible for the program based on their support for immigrants, gender-affirming health care or diversity programs.
James led a coalition of 22 other attorneys general in challenging the rule in November 2025.
The U.S. District Court for the District of Massachusetts granted the coalition's motion for summary judgment, declared the rule illegal and permanently blocked it from taking effect, according to James' office.
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