The suits argue that the changes undermine the intent of the program passed by Congress nearly 20 years ago to relieve student debt for public service employees.
The new rule is in line with “this Administration’s history of targeting nonprofit organizations and government entities that disagree with its policy decisions — and using federal programs, benefits and funding (and the threat of their termination) to compel compliance and chill opposition,” the National Council of Nonprofits wrote in a 78-page complaint filed in US District Court in Boston.
The city joined the lawsuit along with Albuquerque, Chicago, San Francisco, and the county of Santa Clara in California. Numerous labor groups, including the American Federation of State, County, and Municipal Employees also signed onto the lawsuit.
In 2007, Congress passed the Public Service Loan Forgiveness program to address a growing shortage of workers in public service jobs.
It allowed borrowers who made loan payments while completing 10 years of service to their communities or country to have the remainder of their federal student loan debt forgiven.
Since starting, the program has provided more than one million borrowers, including police officers, firefighters, military personnel, teachers, nurses, and social workers, with more than $85 billion dollars in federal student loan forgiveness, according to a complaint filed by the Commonwealth of Massachusetts, 20 other states, and the District of Columbia.
Under the terms of a new rule that was finalized Oct. 31 and goes into effect July 1, 2026, the Department of Education would be allowed to selectively disqualify employers deemed to have engaged in activities with a purported “substantial illegal purpose,” the complaint alleged.
The secretary of education will hold the authority to determine who would be disqualified, and disqualifications would last for 10 years.
“It is arbitrary and capricious; and it contravenes fundamental constitutional principles of free speech and due process,” the complaint filed by the nonprofits and Boston said.
DOE’s new rule mirrors proposed regulations outlined in an executive order Trump issued last spring.
“The Rule — like the Executive Order that directed it — sends a clear message to government and 501(c)(3) nonprofit employers doing work to which the Administration objects: stop, or else,” the nonprofits’ complaint alleged.
In a separate 47-page compaint, the states allege the DOE’s new rule is yet another attempt by the Trump administration to target its “most disfavored groups and activities,” including support for immigrants, gender-affirming care, diversity, equity, and inclusion initiatives, and political protest.
“In seeking to crackdown on specific activities disfavored by this Administration, the true intent behind the rule is clear,” the states’ complaint said. “The Department seeks to chill the activities of public service employees from what it deems objectionable forms of public service.”
The lawsuits ask a federal judge to declare DOE’s new rule unlawful and unconstitutional, and to vacate it and set it aside.
No hearing dates have been scheduled yet.
Tonya Alanez can be reached at tonya.alanez@globe.com. Follow her @talanez.
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