California Attorney General Rob Bonta has joined a coalition of 22 attorneys general in filing a lawsuit against the U.S. Department of Education over new regulations related to the Public Service Loan Forgiveness (PSLF) program. The legal action, filed in the U.S. District Court for the District of Massachusetts, challenges a rule that could exclude certain employers from PSLF eligibility if their activities are deemed to have a “substantial illegal purpose” by the Trump Administration.
The coalition argues that this rule could impact organizations involved in activities such as providing legal services to immigrants, gender-affirming care for minors, diversity and inclusion initiatives, or participating in civil protest. According to state officials, more than 81,000 Californians have received over $6 billion in PSLF forgiveness as of 2024.
“Millions of Americans shaped their lives, made long-term career decisions, and took on deep financial burdens based on the promise that, if they dedicated their lives to public service and made student loan payments for 10 years, their government would support them. Now, the Trump Administration is pulling the rug from under hardworking Americans who absolutely deserve what they were promised,” said Attorney General Bonta. “The Public Service Loan Forgiveness program is a Bush-era, bipartisan-backed effort that encourages generations of young people to build careers in public service. Make no mistake: This is the latest example of the Trump Administration’s weaponization of the federal government to go after people it does not agree with, all the while betraying and eroding the very institutions that uphold our democracy. We’ll see the President in court.”
Established by Congress in 2007 during President George W. Bush’s administration with bipartisan support, PSLF was designed to encourage college graduates to work in lower-paying public sector jobs by offering student loan forgiveness after ten years of qualifying service and payments. Many California state employees are among those eligible for or already benefiting from PSLF as a way to manage significant student debt incurred while preparing for public service roles.
Under the new regulation issued by the Department of Education, the Secretary can disqualify employers from PSLF eligibility if determined to have a “substantial illegal purpose.” State officials argue this standard is vague and may be used against organizations engaged in lawful activities that are politically disfavored by current federal leadership. They contend this creates uncertainty about employer eligibility and may deter potential applicants from entering public service positions—affecting recruitment and retention efforts across critical sectors.
The complaint asserts that these changes violate existing law because Congress defined eligible employers broadly under the Higher Education Act without giving discretionary authority to exclude certain groups or agencies. The attorneys general further claim that failing to define key terms like “substantial illegal purpose” makes enforcement arbitrary and capricious under administrative law standards.
Attorney General Bonta co-leads this lawsuit with counterparts from Colorado, Massachusetts, and New York; additional states joining include Arizona, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, Nevada, New Jersey, New Mexico, Oregon, Rhode Island,Vermont,Washingon,and Wisconsin.
A copy of the complaint can be found here.
