Letitia James Leads Blue State Coalition, Teachers Unions Suing Trump For ‘Weaponizing’ Loan Forgiveness
A coalition of blue states led by New York AG Letitia James and a separate coalition of unions and municipalities led by Randi Weingarten both announced lawsuits Monday against the Trump administration, accusing it of “illegally subverting” a loan forgiveness program by excluding organizations it says are violating federal law.
The Department of Education (ED) announced Thursday that after months of formal regulation, it is releasing an update to the Public Service Loan Forgiveness (PSLF) program to exclude entities that violate federal law. Today, two separate lawsuits challenge the rule: one filed by 21 states and the District of Columbia, and another by Boston, Chicago, San Francisco, the American Federation of Teachers (AFT), the National Education Association (NEA), several pro-immigration organizations, and several others.
“Attorney General James and the coalition are challenging a new federal rule that would deem all state governments, hospitals, schools, and nonprofits ineligible for PSLF if the federal government unilaterally determines that they have engaged in activities the administration disapproves of, such as support for immigrants, gender-affirming health care, or diversity programs,” James’ office said in a press release. “The coalition says this sweeping new rule is illegal, politically motivated, and intended to punish states and organizations the administration doesn’t like. »
This latest lawsuit claims the administration is trying to “silencing governments and nonprofits that are doing work the administration doesn’t like” and is therefore breaking “a decades-old bipartisan Congressional promise to support those who choose to devote their careers to public service.”
Both lawsuits were filed in a Massachusetts district court.
“It is unconscionable that the plaintiffs are defending criminal activity,” Deputy Education Secretary Nicholas Kent told the Daily Caller News Foundation. “This is a common-sense reform that will prevent taxpayer dollars from subsidizing organizations involved in terrorism, child trafficking, and transgender procedures that cause irreversible harm to children. The final rule is very clear: The Department will apply it neutrally, without regard to the employer’s mission, ideology, or the population it serves.”
We are suing the U.S. Department of Education for weaponizing the Public Service Loan Forgiveness program.
This administration is illegally attempting to eliminate loan forgiveness eligibility for organizations and governments based on ideals with which it does not agree.
I’m fighting.
– James AG of New York (@NewYorkStateAG) November 3, 2025
The PSLF program aims to provide student loan forgiveness to government workers and nonprofit organizations considered to serve the public. The updated rule disqualifies employers who “have a significant unlawful purpose,” such as helping children obtain gender reassignment surgeries, violating immigration laws or supporting terrorism. (RELATED: Trump admin to continue student loan forgiveness plans in deal with teachers union)
The lawsuit says that even though the plaintiffs “engage in lawful activities,” they still fear the program will be taken away from them.
“The Public Service Loan Forgiveness Program was created by a Republican president and Democratic senators to help attract and retain teachers, nurses, firefighters and so many others who have dedicated their careers to helping others,” AFT President Randi Weingarten said in a statement. “Trump wants to change that by imposing an ideological litmus test on millions of public employees and their employers that is contrary to American values and contrary to the law in question. It is an illegal attack on those who placed their faith in the bipartisan promise of PSLF, only to have it cruelly ripped away.”
ED recently agreed to continue processing PSLF applications after suspending the program in early 2025, arguing that doing so could be illegal. The Biden administration used programs like PSLF to forgive billions in student loans intended only for public employees, wiping out nearly $200 billion for more than five million borrowers over the four-year period, with plans to target millions more.
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