Over 20 States Sue Trump Administration Over Public Service Loan Forgiveness Rule

A new Trump administration rule restricts eligibility for the Public Service Loan Forgiveness (PSLF) program by disqualifying public employees working for programs deemed to have a "substantial illegal purpose," including organizations supporting gender-affirming care for minors, immigrants, and diversity initiatives. Over 20 Democratic-led states, several cities, nonprofits, and advocacy groups have filed lawsuits challenging this rule, calling it a politically motivated attempt to punish public servants and organizations that do not align with the administration's ideology. They argue the Department of Education lacks authority to impose such ideological litmus tests and that the rule undermines the original intent of the PSLF program, which was designed to encourage public service. The administration defends the rule as a necessary reform to prevent taxpayer dollars from supporting activities it deems criminal or harmful, including terrorism, child trafficking, and transgender procedures. Critics warn the rule will worsen workforce shortages in public sectors and destabilize state agencies that rely on loan forgiveness as a recruitment and retention tool. The legal battles continue as additional lawsuits are expected, and government officials emphasize that the rule will be enforced neutrally regardless of the employer's mission or population served.