As of May 2024, 20,490 Minnesota borrowers had earned discharge of their student loans based on 10 years of public service. This relieved over $1.26 billion in student debt for Minnesotans, which rewarded and incentivized those borrowers’ public service to Minnesota. That relief, now placed in jeopardy for future borrowers, helped secure those families’ financial futures and boosted Minnesota’s economy. Many or most of these borrowers serve agencies and towns and counties across Minnesota, including police and fire fighters, librarians, probation officers, city administrators, and municipal workers that Minnesotans rely on every day. It also includes Minnesota’s military members and federal workers, nurses and hospital workers, and childcare workers.

Attorney General Ellison and the coalition argue that the sweeping new rule is unlawful and targeted to punish states and organizations that the administration does not like. They are asking the court to declare the rule unlawful, vacate it, and bar the Department of Education from enforcing or implementing it. 

“Federal law makes clear that public and nonprofit workers—including Minnesota’s firefighters, military members, nurses, police officers, childcare workers, and city employees—earn student-loan relief after they serve for ten years,” said Attorney General Ellison. “To turn that law against Minnesotans and weaponize it to go after political opponents is wrong and illegal. I am bringing this lawsuit to halt this egregious rule, preserve Congress’s intent and the rule of law for Minnesotans of all political stripes, and protect the livelihoods of those who protect us.”

Congress established the PSLF program in 2007 to provide financial incentives to those who dedicate their careers to the service of others. The program forgives borrowers’ remaining federal student loan debt after ten years of qualifying public service and consistent payments. Over the years, PSLF has enabled more than one million public servants to pursue careers that might have otherwise been out of reach. For state governments, PSLF is a critical tool to recruit and retain qualified professionals in vital fields like education, health care, and law enforcement. 

On October 31, ED finalized a new rule granting itself the power to unilaterally declare entire agencies or organizations ineligible employers for PSLF if the administration determines they have a “substantial illegal purpose.” The rule includes only a very limited definition of such “illegality,” which includes activities that support undocumented immigrants, provide gender-affirming health care to transgender youth, promote diversity, equity, and inclusion efforts, and engage in political protest. The rule is scheduled to take effect in July 2026.

Attorney General Ellison and the coalition warn that this vague new authority could have devastating consequences nationwide. Countless public workers could suddenly lose PSLF eligibility through no fault of their own. States could be forced to confront severe staffing shortages, higher turnover, and skyrocketing costs to maintain essential services.

The coalition’s lawsuit argues that ED’s new rule is flatly illegal. The PSLF statute guarantees loan forgiveness for anyone who works full-time in qualifying public service; it does not grant ED discretion to carve out exceptions based on ideology. They assert that the rule’s vague “substantial illegal purpose” standard is arbitrary and capricious as it gives the Department unfettered power to target specific state policies or social programs while exempting federal agencies from scrutiny. 

Joining Attorney General Ellison in filing this lawsuit, which was led by the attorneys general of California, Colorado, Massachusetts, and New York, are the attorneys general of Arizona, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Michigan, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, Washington, and Wisconsin. A group of private plaintiffs and local governments is also filing a lawsuit today to block the implementation of the new rule.