Lansing, Michigan – For thousands of public workers, the promise is simple: serve your community long enough, and the federal government will forgive the remaining balance on eligible student loans.
This week, that promise survived a legal fight that Michigan Attorney General Dana Nessel said should never have been turned into a political weapon.
Nessel announced the win after a federal judge permanently blocked the Trump administration from denying Public Service Loan Forgiveness to teachers, nurses, first responders and other public servants because of the work or views of their employers. The ruling stopped a U.S. Department of Education rule that was scheduled to take effect July 1.
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The Public Service Loan Forgiveness program, often called PSLF, allows qualifying government and nonprofit employees to have remaining federal student loan debt forgiven after ten years of qualifying public service.
For many workers in schools, hospitals, local agencies and emergency services, the program is not a bonus. It is part of the math that makes lower-paying public service jobs possible.
The rule challenged by Nessel and a coalition of 22 other attorneys general would have changed that math.
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According to the Michigan Attorney General’s office, it would have allowed the administration to deem state governments, hospitals, schools and nonprofit organizations ineligible for PSLF based on their support for immigrants, gender-affirming health care or diversity programs.
Nessel joined the lawsuit in November 2025, arguing that the rule unlawfully restricted eligibility for a program created to support public service, not punish employers over political or policy disagreements. On June 30, the U.S. District Court for the District of Massachusetts granted the coalition’s motion for summary judgment, declared the rule illegal and permanently blocked it from taking effect.
“Public servants who give back to our communities deserve our support, not unlawful political retribution,” Nessel said in her statement.
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She said the court’s decision protected first responders, nurses, teachers and government employees who help keep communities running. Nessel also argued that PSLF helps retain professionals who might otherwise leave for more lucrative private-sector work.
The case centered on more than student debt. At its core was a larger question: whether a federal administration could tie loan forgiveness to whether it approved of a public employer’s mission or policies. The court’s answer, at least in this ruling, was no.
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For Michigan, Nessel framed the decision as both a legal victory and a protection for public institutions. She said the White House was wrong to target workers and employers over political disagreements, adding that her office had “completely halted an illegal attack on Michigan from the federal administration.”