The American Federation of Teachers sued the Trump administration Friday, alleging it unlawfully blocked student loan forgiveness for tens of thousands of borrowers who qualify.
The plaintiffs argue in their lawsuit, Weingarten v. McMahon , filed in the U.S. District Court for the District of Columbia, that U.S. Department of Education Secretary Linda McMahon has mismanaged the popular Public Service Loan Forgiveness program by incorrectly counting borrower's payment timelines and not awarding people credit for time served.
PSLF, which President George W. Bush signed into law in 2007, allows certain not-for-profit and government employees to have their federal student loans canceled after 120 payments, generally paid over 10 years. The Biden administration later adapted the program, making it easier to qualify for it and clearing the way for more than 1 million borrowers to have already had their loans forgiven under the program.
"Secretary McMahon has flagrantly ignored her responsibility to help teachers, nurses and first responders," said AFT President Randi Weingarten, the lead plaintiff, in a statement. The other plaintiffs include AFT members and public service workers. The AFT is a teacher's union representing some 1.8 million members. "This lawsuit demands that McMahon stop stalling and do her job," Weingarten said.
The lawsuit accuses Trump officials of denying borrowers relief under the Biden administration-era PSLF Buyback program. That opportunity allows borrowers who've hit 120 months of qualifying employment to submit a request to the Education Department to retroactively pay for any months they missed because of a forbearance or deferment.
Buyback applications have piled up under the Trump administration, with 88,000 borrowers still waiting for a decision as of the spring, according to a court filing.
The borrowers bringing the lawsuit also say the U.S. Department of Education unfairly lowered their qualifying payment counts out of the blue earlier this year, prolonging borrowers' student loan forgiveness timeline.
"The Department of Education has ripped away the loan forgiveness credit I earned without any explanation," said Elizabeth Schoepflin, a speech-language pathologist and co-plaintiff from New York, in a statement. "Every month this drags on is another payment I shouldn't have to make."
An Education Department spokesperson defended the PSLF program changes, saying the agency is correcting "coding errors" made by the Biden administration.
"These errors resulted in inaccurate payment counts for some borrowers," the spokesperson wrote to CNBC in an email. "The Department remains committed to ensuring that every qualifying payment is properly credited to a borrower's account."
