New Jersey joins multistate lawsuit challenging new federal rule on Public Service Loan Forgiveness program
TRENTON, N.J. — New Jersey Attorney General Matthew J. Platkin has joined 21 other state attorneys general in filing a lawsuit against the U.S. Department of Education, arguing that a new federal rule unlawfully limits eligibility for the Public Service Loan Forgiveness (PSLF) program.
The lawsuit, filed Monday, challenges a rule that would allow the federal government to deem certain state and local agencies or nonprofit organizations ineligible for PSLF if they are determined to have engaged in “substantial illegal” activity. The coalition of attorneys general contends that the new policy is overly broad, lacks a clear legal standard, and could exclude organizations based on political or policy disagreements.
“Since taking office, President Trump has denigrated hardworking public servants who make tremendous sacrifices every day for their communities,” Platkin said. “At a time when the cost of higher education continues to skyrocket, limiting access to public service loan forgiveness is a shortsighted, reckless, and illegal attack on public-minded employees who keep us safe and provide our residents with critical services.”
He added, “Serving our country in law enforcement, education, healthcare, and government is deeply honorable, and we should be doing everything in our power to encourage Americans to give back to their communities through public service. The Public Service Loan Forgiveness program makes these honorable pursuits possible for many Americans — but now the Trump Administration is targeting this critical program. We are proud to stand up for our public servants against this illegal and vindictive attack.”
Created by Congress in 2007, the PSLF program forgives the remaining federal student loan debt of qualifying borrowers who have worked in public service for at least 10 years. More than one million public employees — including teachers, police officers, and healthcare professionals — have benefited from the program since its inception.
Under the new rule, finalized on Oct. 31, the Department of Education would have authority to declare certain employers ineligible if it determines they operate with a “substantial illegal purpose.” The coalition argues this could affect agencies or nonprofits that provide services the administration disfavors, such as those supporting immigrants or offering gender-affirming healthcare.
The attorneys general claim the rule exceeds the Department’s statutory authority, is arbitrary and capricious, and undermines the PSLF program’s intent to support public service workers. The lawsuit seeks to have the rule declared unlawful and prevent its implementation.
The legal challenge — led by the attorneys general of New York, Massachusetts, California, and Colorado — includes New Jersey and 18 other states and the District of Columbia. A separate group of local governments and private plaintiffs also filed suit seeking to block the rule, which is scheduled to take effect in July 2026.
