Teachers Union Sues Education Department Over Student Loan Forgiveness

The American Federation of Teachers filed a class action lawsuit on Friday, arguing that the Trump administration has unlawfully blocked student loan forgiveness for tens of thousands of borrowers. The legal challenge, titled Weingarten v. McMahon, was submitted to the U.S. District Court for the District of Columbia. It targets the management of the Public Service Loan Forgiveness program by U.S. Department of Education Secretary Linda McMahon.

The plaintiffs assert that the Department of Education has mismanaged the program by incorrectly counting payment timelines and failing to award credit for time served. They state that the agency denies borrowers relief under the PSLF Buyback program. This mechanism allows individuals who have reached 120 months of qualifying employment to request retroactive payment for months missed due to forbearance or deferment. A court filing indicates that 88,000 borrowers were still waiting for a decision on their buyback applications as of the spring.

The lawsuit also contends that the Department of Education unfairly lowered qualifying payment counts earlier this year. According to the plaintiffs, this sudden adjustment prolonged the timeline for borrowers to achieve forgiveness. The suit seeks to halt what the group describes as stalling by the current administration.

Randi Weingarten, the AFT president and lead plaintiff, criticized the agency's approach. She stated that Secretary McMahon has flagrantly ignored her responsibility to assist teachers, nurses, and first responders. The AFT represents approximately 1.8 million members, and the other plaintiffs include various AFT members and public service workers.

Elizabeth Schoepflin, a speech-language pathologist from New York and co-plaintiff, described the impact of the administrative changes on her personal finances. She noted that the Department of Education removed loan forgiveness credit she had earned without providing an explanation. Schoepflin added that every month the process drags on requires her to make payments she believes are unnecessary.

The Department of Education defended its actions through a spokesperson who spoke to CNBC via email. The official explained that the agency is correcting coding errors made during the Biden administration. These errors resulted in inaccurate payment counts for some borrowers. The Department stated it remains committed to ensuring that every qualifying payment is properly credited to a borrower's account.

The Public Service Loan Forgiveness program was signed into law by President George W. Bush in 2007. It allows certain not-for-profit and government employees to have federal student loans canceled after 120 payments, a process generally spanning ten years. The Biden administration previously adapted the program to make it easier to qualify, clearing the way for more than 1 million borrowers to have their loans forgiven.