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 hijacking” a loan forgiveness program by excluding organizations it says violate federal law.

The Department of Education (ED) on Thursday announced that after months of formal rulemaking, it is issuing an update to the Public Service Loan Forgiveness (PSLF) program to exclude entities that violate federal law. Now, two separate lawsuits are challenging 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), multiple pro-immigration organizations, and several others.

“Attorney General James and the coalition are challenging a new federal rule that would deem entire state governments, hospitals, schools, and nonprofit organizations ineligible for PSLF if the federal government unilaterally determines they have engaged in activities the administration disapproves of, such as support for immigrants, gender-affirming health care, or diversity programs,” James’s office said in a press release. “The coalition argues that the sweeping new rule is unlawful, politically motivated, and targeted to punish states and organizations that the administration does not like.”

The latter lawsuit claims the administration is attempting “to silence governments and non-profit organizations that do work the Administration doesn’t like” and is therefore breaking “a decades-old bipartisan Congressional promise to support those who choose to dedicate their careers to public service.”

Both lawsuits were filed in a Massachusetts district court.

“It is unconscionable that the plaintiffs are standing up for criminal activity,” Under Secretary of Education Nicholas Kent told the Daily Caller News Foundation. “This is a commonsense reform that will stop taxpayer dollars from subsidizing organizations involved in terrorism, child trafficking, and transgender procedures that are doing irreversible harm to children. The final rule is crystal clear: the Department will enforce it neutrally, without consideration of the employer’s mission, ideology, or the population they serve.”

We’re suing the U.S. Department of Education for weaponizing the Public Service Loan Forgiveness program.

This administration is trying to illegally cut off loan forgiveness eligibility for organizations and governments based off ideals it doesn’t agree with.

I’m fighting back.

— NY AG James (@NewYorkStateAG) November 3, 2025

The PSLF program is meant to provide student loan forgiveness to government and nonprofit workers who are considered to be serving the public. The updated rule disqualifies employers that “have a substantial illegal purpose,” such as assisting children in obtaining sex change operations, violating immigration laws, or supporting terrorism.

The lawsuit states that even though the plaintiffs “are engaged in lawful activities,” they still fear the program will be stripped from them.

“Public Service Loan Forgiveness was created by a Republican president and Democratic senators to help attract and retain teachers, nurses, firefighters, and so many others who’ve 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 servants and their employers, that’s antithetical to American values and contrary to the statute at hand. It’s an illegal attack on those who placed their faith in PSLF’s bipartisan promise, only to see it cruelly ripped away.”

ED recently agreed to continue processing PSLF applications after pausing the program at the beginning of 2025, arguing it may be unlawful. The Biden administration used programs such as PSLF to forgive billions in student loans for government workers alone, axing nearly $200 billion for over five million borrowers during the four-year term, with sights set on targeting millions more.

All republished articles must include our logo, our reporter’s byline, and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.

DONATE TO BIZPAC REVIEW

Please help us! If you are fed up with letting radical big tech execs, phony fact-checkers, tyrannical liberals and a lying mainstream media have unprecedented power over your news please consider making a donation to BPR to help us fight them. Now is the time. Truth has never been more critical!