Press Release  AG Campbell Prevents U.S. Department Of Education From Imposing New Restrictions On Public Service Loan Forgiveness

Boston — Massachusetts Attorney General Andrea Joy Campbell announced that she and a coalition of 22 other attorneys general secured a victory in their lawsuit against the U.S. Department of Education (ED) for unlawfully restricting eligibility for the Public Service Loan Forgiveness (PSLF) program, which allows government and nonprofit employees to have their federal student loans forgiven after ten years of service. 

The new rule, if implemented, would have allowed ED to deem certain state and local governments and nonprofit organizations ineligible employers for PSLF if the federal government determines they have engaged in actions with a substantial illegal purpose – in practice, activities or actions that are disfavored by the Administration. 

“PSLF has enabled talented, service-minded individuals to build careers in service of their communities – with the promise that their sacrifice would be honored with loan forgiveness,” said AG Campbell. “This victory ensures that the Trump Administration cannot change the rules and punish the very people who keep our communities running.” 

The PSLF program was established by Congress in 2007 to provide debt relief to those who dedicate their careers to the service of others. The program forgives borrowers’ remaining federal student loan debt after ten years of qualifying public service and consistent payments. Over the years, PSLF has enabled more than one million public servants to pursue careers that might have otherwise been out of reach. For state governments, PSLF is a critical tool to recruit and retain qualified professionals in vital fields like education, health care, and law enforcement.  

On October 31, ED finalized a new rule granting itself the power to unilaterally declare entire agencies or organizations ineligible employers for PSLF if the Administration determines they have a “substantial illegal purpose.” The rule defines such “illegality” to include activities that support undocumented immigrants, provide gender-affirming health care to transgender youth, promote diversity, equity, and inclusion efforts, and engage in political protest. The rule was scheduled to take effect in July 2026.   

In their lawsuit, AG Campbell and the coalition argued that the vague new rule would have devastating consequences nationwide, including potentially causing countless public workers to lose PSLF eligibility through no fault of their own. In its ruling, the Court agreed with the coalition that the rule is illegal and permanently blocked it from taking effect. The Court described the bargain that Congress had struck: the government has promised to forgive the balance of a borrower’s student loan in exchange for the borrower’s commitment to public service. The Court found that ED lacked the authority to fundamentally alter the terms of this bargain. 

Joining AG Campbell in filing this lawsuit, which she co-led with the attorneys general of New York, California, and Colorado, were the attorneys general of Arizona, Connecticut, Delaware, Hawai'i, Illinois, Maine, Maryland, Michigan, Minnesota, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia. A group of private plaintiffs and local governments that had challenged the same restrictions on PSLF also won their lawsuit. 

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