Overview
- A coalition of state attorneys general led by California, with counterparts from New York and other states, filed suit in the U.S. District Court for the District of Massachusetts to vacate the rule and bar its enforcement.
- A separate complaint by Protect Borrowers and Democracy Forward represents cities including Boston, Chicago, San Francisco and Albuquerque, major teachers’ unions and nonprofits such as the National Council of Nonprofits.
- The final rule, published Oct. 30–31 and set to take effect July 1, 2026, allows the Education secretary to disqualify employers judged to have a “substantial illegal purpose,” citing examples like aiding illegal immigration and certain gender-transition care for minors.
- Plaintiffs argue the Higher Education Act leaves no discretion to carve out employer exceptions, say the standard is unconstitutionally vague, and warn it will deter public-service careers and destabilize staffing for governments and nonprofits.
- The Education Department defends the change as a neutral, commonsense safeguard to prevent taxpayer subsidies for unlawful conduct, with notice-and-rebuttal procedures and potential corrective action plans before a 10-year bar.