American Federation of Teachers sues US Edu Dept over blocked student loan forgiveness

The American Federation of Teachers (AFT) has escalated its fight for student loan forgiveness by filing a class action lawsuit against the US Department of Education and Secretary Linda McMahon.

The union alleges that the department unlawfully blocked hundreds of thousands of borrowers from receiving relief despite meeting the requirements of multiple forgiveness programs.

“This legal action reflects the urgent need to hold the Department accountable and ensure borrowers receive the debt relief they are entitled to,” the AFT said in a statement.

The lawsuit comes amid ongoing controversy over income-driven repayment (IDR) plans and the Public Service Loan Forgiveness (PSLF) program.

According to Forbes, the AFT’s amended complaint expands allegations to include mass denial of applications and improper handling of forgiveness requests, leaving borrowers trapped with debts that should have been canceled.

The complaint details how borrowers following IDR plans, including Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE), along with PSLF participants, were denied credit toward loan forgiveness.

The Department allegedly suspended the PSLF Buyback program and blocked processing for multiple programs, leaving borrowers with ongoing financial burdens, accruing interest, and potential tax liabilities if forgiveness is further delayed.

“The Department’s obstruction contradicts program rules and exacerbates financial distress for borrowers who acted in good faith,” the complaint states.

It further alleges that administrative delays were politically motivated and used pretexts such as court orders tied to the SAVE plan to justify withholding relief.

With over a million applications reportedly unresolved, the lawsuit seeks class certification to represent all affected borrowers and demands that the Department immediately process forgiveness applications in accordance with statutory requirements.

This legal action is part of a broader wave of disputes surrounding student loan forgiveness, reflecting tensions between federal policy intentions and administrative execution.

Previous reform attempts under multiple administrations, including the Biden administration, have faced litigation and court challenges, leaving borrowers in uncertainty.

For those impacted, the lawsuit offers a potential path to reclaim promised loan forgiveness, though the process is expected to be lengthy.

Observers say the case highlights the need for transparency, efficiency, and fairness in federal student loan administration.

The AFT’s class action underscores the broader struggle for financial justice for borrowers, emphasizing accountability, timely relief, and systemic reform in a complex and often delayed federal student loan system.