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The cities of Albuquerque, N.M., Boston, Chicago and San Francisco are suing the Trump administration over changes it plans to make to the popular Public Service Loan Forgiveness program, or PSLF.

The lawsuit, which also includes the nation's two largest teachers unions and the American Federation of State, County and Municipal Employees, comes less than a week after the U.S. Department of Education 

Effective July 1, 2026, the department says the change will allow it to deny loan forgiveness to workers whose government or nonprofit employers engage in activities with a "substantial illegal purpose." The job of defining "substantial illegal purpose" will fall not to the courts but to the education secretary.

PSLF was created by Congress in 2007, and signed by then-President George W. Bush, to cancel the federal student loan debts of borrowers who spend a decade working in public service, including teaching, nursing and policing.

According to the lawsuit, filed Monday in the U.S. District Court for the District of Massachusetts, the plaintiffs fear that a city or county government's resistance to the administration's immigration actions, for example, or anti-DEI policies, could lead the secretary to exclude that government's public workers from loan forgiveness. They worry that a local nurse or first responder could be denied loan forgiveness because their local leaders defied the Trump administration.

The complaint argues the rule is "an attempt to target organizations and jurisdictions whose missions and policies do not align with [the Trump administration's] political positions on immigration, race, gender, free speech, and public protest."

"Politically motivated retaliation, like what the administration has done here, should have no place in America," said Skye Perryman, president and CEO of Democracy Forward, one of the organizations representing the plaintiffs.

The plaintiff group also includes the National Council of Nonprofits, which 

"Nonprofits operate food banks, serve veterans, assist domestic violence survivors, deliver meals to seniors, respond to disasters, and much more. Nonprofits must be able to identify and meet those needs without political interference, fear of retribution, or exclusion from a program designed to support their employees."

Under Secretary of Education Nicholas Kent denounced the lawsuit. 

"It is unconscionable that the plaintiffs are standing up for criminal activity," Kent said in a statement to NPR. "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."

In response to plaintiffs' concerns that the administration could use PSLF as a weapon to punish political opponents, Kent insisted "the Department will enforce [the rule] neutrally, without consideration of the employer's mission, ideology, or the population they serve."

The complaint says PSLF has allowed local governments to retain employees, including lawyers and engineers, who could earn more in the private sector. Albuquerque's leaders say that losing access to PSLF "would likely create an untenable staffing crisis."

In a statement, Boston Mayor Michelle Wu added: "The City is joining with cities, unions, and nonprofits across the country to protect a program that helps Boston's workforce and millions of Americans in public service careers pay for college."

What activities does the administration consider to be illegal? 

One key question raised by this rule change, and the lawsuit, is: How will the Education Department define activities with "substantial illegal purpose"?

According to the rule itself, such activities could include:

If the secretary determines that an employer has behaved with "substantial illegal purpose," according to the rule, the employer can either engage with the department and accept a corrective action plan or risk losing access to PSLF for its employees for 10 years.

In response to public comments, the Education Department 

, "[it] would have no basis to remove eligibility from nonprofits engaged in work related to immigrant communities, LGBTQ+ individuals, or racial justice if those organizations are following the law."

But the plaintiff cities, which sit on the U.S. Justice Department's 

 list, say the Trump administration has already accused them of impeding the enforcement of federal law, and that this rule "represents yet another attack on politically disfavored local governments and nonprofits that have local laws, policies, and missions that are anathemas to the Administration."

"The actions of these cities are legal," says Persis Yu, of Protect Borrowers, another organization representing the plaintiffs. What's more, she says, "whether or not these activities are legal, is not a [determination] that the secretary of education has either the right or the expertise to be making."

, issued in March, in which President Trump accused the Biden administration of abusing PSLF, and said the program "has misdirected tax dollars into activist organizations that not only fail to serve the public interest, but actually harm our national security and American values, sometimes through criminal means."

What did Congress intend when it created PSLF? 

The plaintiffs argue Congress was clear about what should qualify as "public service" when it wrote the law, and that this new rule goes against lawmakers' intent.

"The Higher Education Act defines public service jobs as including government or a 501(c)(3) tax-exempt nonprofit organization. It does not provide any discretion or wiggle room within that definition," Yu says. "Congress has said that this is who is entitled to public service loan forgiveness. The secretary doesn't have the authority to change that."

In response to public comments, the Education Department has 

, writing that "[it] rejects the suggestion that this rule exceeds its legal authority. The [Higher Education Act] grants the Secretary explicit power to regulate title IV programs. PSLF is a title IV program, and its proper administration requires clear, enforceable standards."

Another lawsuit was filed in tandem Monday, by a coalition of 21 state attorneys general, arguing on behalf of Democratic-leaning state governments that worry their public employees could likewise be denied loan forgiveness because of state leaders' decisions to support immigrants, promote DEI or provide gender affirming care. 

The coalition of attorneys general warned in a press release that the rule would result in "widespread confusion, fear, and instability in the public workforce, forcing states to confront severe staffing shortages, higher turnover, and skyrocketing costs to maintain essential services." 

According to federal data, more than 1.1 million public service workers have thus far had their federal student loan debts discharged under PSLF. 

This story was updated to include comment from the U.S. Department of Education.

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A new lawsuit argues the latest changes to Public Service Loan Forgiveness could exclude public servants whose organizations have resisted President Trump's policies.

Public workers could be denied loan forgiveness if cities defy Trump, lawsuit alleges

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