Overview
- Two lawsuits were filed in federal court in Boston: one by 21 states and Washington, D.C., and another by a coalition of cities, unions, and nonprofits represented by Democracy Forward and Protect Borrowers.
- The final rule, issued last week, revises which employers qualify for PSLF by allowing disqualification of organizations found to have a 'substantial illegal purpose,' with examples including aiding illegal immigration, supporting terrorism, or providing certain gender-affirming care to minors.
- The policy is scheduled to take effect July 1, 2026, and plaintiffs seek a declaration that it is unlawful along with injunctions to block implementation and enforcement.
- The Education Department, through Under Secretary Nicholas Kent, defends the change as a neutral, commonsense anti‑fraud measure and says it will enforce the standard without regard to ideology or mission.
- Plaintiffs warn of chilled public-service employment and program instability; PSLF has already canceled debts for more than 1 million borrowers, and the department estimates fewer than 10 employer removals a year under the rule.