Four non-profit organizations have filed a lawsuit against the U.S. Department of Education, challenging a new rule that could disqualify certain employers from the Public Service Loan Forgiveness program.
Washington, D.C., Nov. 4 — A coalition of four non-profit public-interest organizations has initiated legal action against the U.S. Department of Education (ED) over a newly established rule that threatens to disqualify certain employers from participating in the federal Public Service Loan Forgiveness (PSLF) program. The plaintiffs in this case include Robert F. Kennedy Human Rights, the American Immigration Council, The Door – A Center of Alternatives, Inc., and the League of United Latin American Citizens (LULAC). They are represented by Student Defense and the Public Citizen Litigation Group.
The new rule, finalized on October 31, was implemented in response to an Executive Order issued by former President Donald Trump. It grants the Secretary of Education the authority to disqualify employers from the PSLF program if they are deemed to have a “substantial illegal purpose.” This determination will be made unilaterally by ED, based on its assessment of whether an organization has engaged in activities that the current administration disapproves of, particularly concerning immigration, gender-affirming care, and alleged discrimination, among other issues. Critics argue that the rule’s vague and broad language allows for arbitrary enforcement against mission-driven organizations that may express views contrary to those of the government.
The implications of this regulation could be significant for the approximately 2.5 million federal student loan borrowers who have collectively dedicated over 100 million months to public service jobs in pursuit of PSLF forgiveness. The lawsuit contends that the new rule will hinder employers in specific fields, such as immigrant advocacy, from effectively recruiting and training employees. Furthermore, it asserts that the rule contradicts the PSLF statute, exceeds the Department’s regulatory authority, and infringes upon the constitutional rights of nonprofits whose employees are eligible for PSLF.
Established in 2007, the PSLF program was designed to encourage graduates to pursue careers in public service. It offers federal student loan forgiveness to individuals who spend ten years repaying their loans while employed full-time in qualifying public service positions. The statute outlines a clear list of eligible employers, which includes military service, emergency management, public health, government, public safety, law enforcement, early childhood education, library science, and all 501(c)(3) organizations, among others.
The lawsuit seeks a court ruling declaring the new rule unlawful and asserting that ED lacks the authority to alter the statutory criteria for PSLF. Cormac Early, an attorney at Public Citizen Litigation Group and the lead counsel on the case, emphasized that “Congress created PSLF to support those who work in public service jobs, not to let the President play favorites. The Trump administration should not be allowed to use a program designed to reward public service as a weapon against its political enemies.”
Student Defense President Aaron Ament added, “Congress made a promise that if Americans give back to the country, the country will give back to them. Now the Trump Administration wants the power to renege on that promise if they disagree with your employer’s mission or perceived political views. This new, unlawful rule is a slap in the face to the millions of first responders, health workers, teachers, and other public servants who believed the government could be trusted to keep its word.”
Kerry Kennedy, President of RFK Human Rights, stated, “The Trump Administration’s attack on the Public Service Loan Forgiveness program strikes at the heart of civic space and public service. By targeting individuals who choose to work in nonprofits defending the human rights of immigrants and advancing diversity, inclusion, and transgender rights, this rule seeks to silence voices for equity and justice while weakening these organizations’ ability to recruit the next generation of leaders.”
Jorge Loweree, Managing Director of Programs and Strategy at the American Immigration Council, remarked, “Public Service Loan Forgiveness was a clear commitment from the government to individuals who have dedicated themselves to public service. This regulation weaponizes that commitment. No one should be forced to choose between supporting their neighbors and securing the financial stability they were promised.”
Juan Proaño, CEO of the LULAC Institute, expressed concern for Latino families, stating, “Latino families across the country rely on mission-driven nonprofits for immigration assistance, health care, and programs that support underserved young adults. This rule hands any administration a blank check to punish nonprofits it dislikes and jeopardizes the future of the teachers, nurses, veterans, and legal advocates who serve the public every day.”
The lawsuit highlights the potential consequences of the new rule on public service employment and the broader implications for civic engagement and advocacy in the United States.
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