Attorney General Bonta Secures Total Win for Public Servants, Court Fully Vacates Rule Weaponizing Public Service Loan Forgiveness Program

OAKLAND - California Attorney General Rob Bonta today celebrated an order from U.S. District Court for the District of Massachusetts vacating the Trump Administration's illegal rule which would have denied Public Service Loan Forgiveness (PSLF) eligibility to employees of organizations deemed by the Trump Administration to have a "substantial illegal purpose." Had it gone into effect, the rule could have empowered the Administration to strip PSLF eligibility from organizations engaged in important, legal activities, such as providing legal services to immigrants, providing gender-affirming care to minors, participating in Diversity, Equity, and Inclusion (DEI) initiatives, or engaging in civil protest and the right to assembly. The PSLF program is critical in recruiting nurses, first responders, teachers, military personnel, and others working in public service careers, both in government and the nonprofit sectors. The order today found the U.S. Department of Education regulations are contrary to law and promulgated in excess of statutory authority, are arbitrary and capricious, and violate the First Amendment of the U.S. Constitution.

"A court has thrown out the Trump Administration's illegal attempt to go back on the federal government's word and rip away public service loan forgiveness from people doing work the President doesn't like. Millions of Americans shaped their lives 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," said Attorney General Bonta. "We challenged the Administration's illegal action in court last year because our public servants deserve what was promised. Today's decision is a strong rebuke of the Trump Administration's continued efforts to weaponize the federal government. We'll continue to fight to protect public servants and uphold our democratic institutions."

BACKGROUND

In 2007, a bipartisan Congress under the Bush Administration created PSLF to encourage college graduates to work in the public sector, where salaries are often lower than at for-profit companies. The PSLF program enables public servants who work in eligible government and nonprofit roles to have their qualifying federal student loans forgiven after 10 years of qualifying service and payments. It helps public service employers recruit and retain skilled workers who might otherwise be forced to turn to private sector employment to afford to pay their student loans. Many California state employees are eligible for, actively pursuing, or have already benefited from PSLF as a means of managing the significant student debt that they incurred in preparing for skilled public service careers.

In November 2025, Attorney General Bonta co-led a coalition of 22 attorneys general in filing a lawsuit challenging U.S. Department of Education regulations that could exclude people with federal student loans from PSLF eligibility based on whether their employers engage in actions that the Trump Administration deems to have a "substantial illegal purpose." The vagueness of the rule could have empowered the Trump Administration to target politically disfavored conduct and could have threatened PSLF eligibility for organizations that are engaged in longstanding and legal activities. The rule created uncertainty as to who was an eligible employer and would have deterred student borrowers from entering public service. The resulting uncertainty of the rule was expected to undercut the state's ability to recruit and retain skilled employees.