AG Kaul Sues U.S. Department of Education, Asking Court to Block New Restrictions on Public Service Loan Forgiveness

MADISON, Wis. – Today, Attorney General Josh Kaul and a coalition of 21 other attorneys general filed a lawsuit against the U.S. Department of Education (ED) challenging a new rule that unlawfully restricts employers’ eligibility for the Public Service Loan Forgiveness (PSLF) program.

“The PSLF program has helped folks build careers serving their communities,” said AG Kaul. “This rule, which would undercut and enable the Secretary of Education to weaponize the program, should be struck down.”

PSLF allows public service employees to have their federal student loans forgiven after ten years of qualifying employment. The rule the attorneys general are challenging would allow the federal government to declare employers ineligible for PSLF. Under the rule, the Secretary of Education may strip an employer of eligibility for activities related to policies the Trump Administration opposes. The rule employs vague criteria and standards to give the Secretary discretion to punish the Trump Administration’s policy adversaries.

ED finalized the rule on October 31. The rule will take effect in July 2026 unless blocked by a court. The coalition argues that the sweeping new rule is unlawful and targeted to punish states and organizations the Administration does not like.

Since its creation in 2007, the PSLF program has enabled more than one million public servants to pursue careers that might have otherwise been out of reach. For state governments, PSLF is a critical tool to help recruit and retain qualified professionals in vital fields like education, health care, and law enforcement.

The coalition warns that the rule could have significant consequences nationwide. Public employees could lose PSLF eligibility through no fault of their own, and qualifying employers could face staffing shortages, higher turnover, and increased costs to maintain essential services.

The lawsuit argues that ED’s rule is unlawful. The PSLF statute guarantees federal student loan forgiveness for anyone who works full-time in qualifying public service; it does not grant ED discretion to exclude public employers. The coalition also argues that the rule is arbitrary and capricious, as it gives ED broad authority to target specific state policies or social programs while exempting federal agencies from scrutiny.

The attorneys general are asking the court to declare the rule unlawful, vacate it, and bar ED from enforcing or implementing it.

Joining AG Kaul in filing this lawsuit are the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawai’i, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New York, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, and Washington.

NOTE: This press release was submitted to Urban Milwaukee and was not written by an Urban Milwaukee writer. While it is believed to be reliable, Urban Milwaukee does not guarantee its accuracy or completeness.