On November 3, a coalition of 22 state attorneys general announced a lawsuit in the U.S. District Court for the District of Massachusetts against the U.S. Department of Education. The suit seeks to block the department’s October 31 final rule that amended the Public Service Loan Forgiveness (PSLF) program, in part, to exclude an individual from eligibility if their employer (e.g., state governments, municipal governments, or non-profit organizations) is designated as having a “substantial illegal purpose.”

The rule defined “substantial illegal purpose” as engagement in any of six categories of alleged illegal activities: (i) aiding or abetting violations of federal immigration laws; (ii) supporting terrorism; (iii) “[e]ngaging in the chemical and surgical castration or mutilation of children in violation of Federal or State law”; (iv) “[e]ngaging in the trafficking of children to another State for purposes of emancipation from their lawful parents in violation of Federal or State law”; (v) engaging in a pattern of aiding and abetting illegal discrimination; or (vi) engaging in a pattern of violating state laws.

The attorneys general asserted that (i) these exclusions unlawfully restrict eligibility for the PSLF program, as the eligibility criteria are statutorily defined; and (ii) the exclusionary criteria are arbitrary and capricious in violation of the APA. The attorneys general asserted that the court should “declare the [f]inal [r]ule to be unlawful, vacate it, and enjoin [d]efendants from enforcing or implementing the [f]inal [r]ule.”