More than 20 Democrat-led states are unleashing a legal challenge against a newly unveiled Trump administration policy which would effectively block nonprofit and government workers from student loan cancellation under the Public Service Loan Forgiveness program if federal officials determine their employer has a 'substantial illegal purpose'.
This policy specifically targets organizations that assist immigrants and transgender youth, igniting significant controversy.
The lawsuit, filed in Massachusetts on Monday, claims that the Trump administration has overstepped its authority by imposing new eligibility requirements for the loan forgiveness program and warns that such changes will exacerbate job shortages and create instability within state workforces.
Leading the legal battle are states including New York, Massachusetts, California, and Colorado. New York Attorney General Letitia James accused the new regulation of being 'a political loyalty test disguised as a regulation,' describing it as 'unjust and unlawful' for preventing hardworking Americans from receiving loan forgiveness based on ideological grounds.
A separate group comprising cities, nonprofits, and labor organizations concurrently filed a lawsuit challenging the regulation in Massachusetts.
In response, Under Secretary of Education Nicholas Kent stated that it is 'unconscionable' for the plaintiffs to defend organizations he describes as promoting criminal activities. He asserted that the policy aims to prevent taxpayer dollars from supporting practices like terrorism and child trafficking, specifically referencing gender-affirming treatment for transgender minors as part of the discussion.
The newly instated policy allows the Department of Education discretion to decide an organization's eligibility based on a broad interpretation of 'substantial illegal purpose', raising concerns among the states about its vagueness and potential for misuse.
The suit requests a federal court to rule the policy as unlawful and to prevent its enforcement by the Education Department.
