Public workers could be denied loan forgiveness if cities defy Trump, lawsuit says

The complaint alleges that the rule “seeks to target organizations and jurisdictions whose missions and policies are inconsistent with the rule.” [the Trump administration’s] Political stances on immigration, race, gender, free speech, and public protest. “

“Politically motivated retaliation, like what the government is doing here, should have no place in America,” said Skye Perryman, president and CEO of Democracy Forward, one of the groups representing the plaintiffs.

The plaintiff group also includes the National Council of Nonprofits, which said in a statement after the rule was released:

“Nonprofits operate food banks, serve veterans, assist domestic violence survivors, provide meals to seniors, respond to disasters and more. Nonprofits must be able to identify and meet these needs without political interference, fear of retaliation, or being excluded from programs designed to support their employees.”

Deputy Education Minister Nicholas Kent condemned the lawsuit.

“It is unconscionable for plaintiffs to support criminal activity,” Kent said in a statement to NPR. “This is common-sense reform that will stop taxpayer dollars from funding organizations involved in terrorism, child trafficking and gender reassignment surgeries that cause irreversible harm to children.”

Responding to plaintiffs’ concerns that the government could use PSLF as a weapon to punish political opponents, Kent insisted that “the department will enforce [the rule] Neutral, without regard to the employer’s mission, ideology, or the populations they serve. “

PSLF allows local governments to retain employees, including attorneys and engineers, who could earn more in the private sector, the lawsuit said. Albuquerque leaders said losing access to PSLF “could create an untenable staffing crisis.”

“The City of Boston is working with cities, unions and nonprofits across the country to protect a program that helps Boston’s workforce and millions of Americans working in public service careers pay for college,” Boston Mayor Michelle Wu added in a statement.

What activities does the government consider illegal?

A key question raised by this rule change and lawsuit is: How will the Department of Education define activities that have a “substantial unlawful purpose”?

Depending on the rules themselves, such activities may include:

• “Aiding and abetting violations of federal immigration laws”
• “Supporting terrorism or engaging in violence for the purpose of obstructing or influencing federal government policy”
• “Chemical and surgical castration or mutilation of children in violation of federal or state law”
• “Trafficking a child to another state for the purpose of escaping the custody of his or her legal parents in violation of federal or state law”
• “Engaging in a pattern of aiding and abetting unlawful discrimination”
• “And engaging in conduct that violates state law.”

If the Secretary determines that an employer acted with a “substantial unlawful purpose,” under the rule, the employer can engage with the department and accept a corrective action plan or risk being unable to obtain PSLF for its employees for 10 years.

In response to public comments, the Ministry of Education stated: “[it] If these organizations comply with the law, there is no reason to disqualify nonprofits that do work related to immigrant communities, LGBTQ+ individuals, or racial justice. “

But the plaintiff cities, which are on the U.S. Department of Justice’s list of “sanctuary jurisdictions” that the Trump administration has accused them of impeding enforcement of federal law, said the rule “represents yet another attack on politically disadvantaged local governments and nonprofits whose local laws, policies and mandates are anathema to the government.”

“What these cities are doing is legal,” said Persis Yu of Borrower Defense, another group representing the plaintiffs. What’s more, she said, “Whether these activities are legal or not is not an issue. [determination] The education minister either has the power or the expertise. “

The new rule is the culmination of a presidential action issued in March in which President Trump accused the Biden administration of abusing PSLF and said the program “misdirects tax dollars to activist groups that not only fail to serve the public interest but actually harm our national security and American values, sometimes through criminal means.”

What was Congress’ original intention in creating PSLF?

The plaintiffs argue that Congress clearly defined “public service” when it enacted the law and that this new rule goes against what lawmakers intended.

“The Higher Education Act defines public service employment as including government or 501(c)(3) tax-exempt nonprofit organizations. It does not provide any discretion or wiggle room in that definition,” Yu said. “Congress has said who is entitled to Public Service Loan Forgiveness. The minister has no power to change that.”

In response to public comments, the Department of Education disagreed, writing: “[it] Reject the suggestion that the rule exceeds its legal authority. this [Higher Education Act] Grants the Secretary explicit authority to regulate Title IV programs. PSLF is a Category 4 program and its proper management requires clear, enforceable standards. “

A coalition of 21 state attorneys general simultaneously filed a separate lawsuit on Monday on behalf of Democratic-leaning state governments that fear their public employees may also be denied loan forgiveness because of decisions by state leaders to support immigration, promote DEI or provide gender-affirming care.

A coalition of attorneys general warned in a press release that the rule would lead to “widespread confusion, fear, and instability in the public workforce, forcing states to face severe staffing shortages, increased turnover, and skyrocketing costs to maintain essential services.”

To date, more than 1.1 million public service workers have had their federal student loan debt forgiven under PSLF, according to federal data.