Illinois Attorney General Kwame Raoul says the Trump administration has dropped its appeal of a federal court ruling that permanently blocks a rule limiting eligibility for the Public Service Loan Forgiveness program.

In an announcement Wednesday, Raoul said the administration dropped the appeal, ending his lawsuit over the rule. The Public Service Loan Forgiveness, or PSLF, program allows government and nonprofit employees to have their federal student loans forgiven after 10 years of service.

Raoul and a coalition of attorneys general sued the administration in November 2025 over the rule. According to the release, the U.S. District Court for the District of Massachusetts vacated the rule in June 2026.

The U.S. Department of Education rule at issue would have given the administration the power to deem state governments, hospitals, schools and nonprofit organizations ineligible for PSLF based on their support for immigrants, gender-affirming healthcare or diversity programs, the release said. In its June 2026 order, the court held the regulations were contrary to law, arbitrary and capricious, exceeded the agency's statutory authority and violated the First Amendment, according to Raoul's office.

"The president's attempt to punish states he disagrees with politically was illegal, and I am pleased with our win in this case," Raoul said. "I will continue to stand with my fellow attorneys general to protect nurses, teachers, first responders and all Americans who choose to devote their lives to public service."

The release says PSLF was established by Congress in 2007 to encourage students to dedicate their careers to public service. It forgives a borrower's remaining federal student loan debt after 10 years of qualifying public service and consistent payments. The release says more than 1 million public servants have used the program, calling it a critical tool for states to recruit and retain workers in education, healthcare and law enforcement.

Background

According to the Consumer Financial Protection Bureau, PSLF forgives qualifying federal Direct Loans after a borrower makes 120 qualifying monthly payments while working full time for a qualifying public service employer. Only federal Direct Loans qualify, and borrowers typically must be enrolled in a qualifying repayment plan such as an income-driven plan, the bureau says.

States that joined the lawsuit

The release says joining Raoul in filing the lawsuit were the attorneys general of:

  • Arizona, California, Colorado, Connecticut, Delaware and the District of Columbia
  • Hawaii, Maine, Maryland, Massachusetts, Michigan and Minnesota
  • Nevada, New Jersey, New Mexico, New York and Oregon
  • Rhode Island, Vermont, Washington and Wisconsin