Overview
- The rule, finalized last week, allows the Education Department to disqualify government and nonprofit employers from Public Service Loan Forgiveness for having a “substantial illegal purpose” or engaging in “unlawful activities.”
- Attorneys general from 21 states and the District of Columbia filed suit in the U.S. District Court for the District of Massachusetts seeking to vacate and enjoin the regulation.
- A separate challenge led by Protect Borrowers and Democracy Forward, joined by cities and two major teachers’ unions, also seeks to strike down the change.
- The state and advocacy plaintiffs argue the rule exceeds the Higher Education Act, violates the Administrative Procedure Act, and introduces vague standards that could sweep in lawful public‑interest work and undercut public‑sector recruitment.
- The Education Department defends the policy as neutral, citing the need to avoid subsidizing organizations tied to terrorism, child trafficking, abetting illegal immigration, or supporting gender transition for minors.