American Federation of Teachers Files Court Order to Protect Public Service Loan Forgiveness and Income-Driven Repayment Plans

On September 16, 2025, the American Federation of Teachers (AFT) filed a court order asking a federal judge to prevent the Department of Education (ED) from temporarily stopping required loan cancellations and the processing of Public Service Loan Forgiveness (PSLF). This move comes after their March 2025 lawsuit against the ED and the Secretary of Education, Linda McMahon, for unlawfully shutting down or delaying relief under income-driven repayment (IDR) plans and PSLF.

During our Spring 2025 Assembly, we adopted a resolution to join the American Federation of Teachers (AFT) in their lawsuit.

AFT has also co-authored a report with Protect Borrowers, called the MOHELA Papers, uncovering disturbing trends in PSLF loan denials by one of the largest holders and servicers of student loans in the U.S., MOHELA.

MOHELA is currently under investigation by multiple state attorneys general for a series of abuses that include misleading and misinforming borrowers about their repayment options. A report from the Offices of Senators Elizabeth Warren, Richard Blumenthal, Ed Markey, and Chris Van Hollen in April 2024 show a decades-long pattern of student loan servicer incompetence and misconduct that has affected millions of borrowers nationwide.

According to the records accompanying the MOHELA Papers, at least 125 workers at the CSU were denied PSLF—the most denials for workers at any employer described in those records.

PSLF is an important federal program that can lead to borrowers having their remaining student loan balance forgiven after 120 qualifying payments. Essentially, it lifts the burden of student debt not just for educators, but for healthcare professionals and public servants who have committed much of their working lives to serving our communities.

As of August 2025, the ED is still reviewing 1.3 million pending applications from borrowers seeking to lower their monthly student loan payments.

At the time of the AFT lawsuit, federal officials eliminated access to IDR plans by doing two things: scrubbing the application from their website and ordering all student loan services to halt any processing of current applications.

In April 2025, the ED took down its payment tracking tool that borrowers use to track their eligibility and progress toward loan forgiveness. They have given no further details as to when it will be back up.

The Department of Financial Protection and Innovation (DFPI) has also taken action against MOHELA, asserting that the servicer failed to turn over timely information about who is eligible for debt relief, thereby sabotaging more than a thousand borrowers who could have applied.

Debt impacts how individuals and institutions make decisions, what we prioritize, and how we understand the value of education. For many of us, student loan debt has become deeply entrenched in our lives, leaving us vulnerable to exploitation in a number of ways.

Higher education administrators are increasingly treating students like clients, and they’re being sold the premise that there will be a return on investment for rising tuition costs and student fees. Meanwhile, these administrators spout off about insufficient funds while pressuring faculty to accept working conditions we would never otherwise agree to.

Debt essentially narrows how we come to see ourselves and one another: it redefines our worthiness in purely economic terms.

Today, US borrowers hold nearly $1.6 trillion in federal student loan debt, and 3.8 million Californians owe over $142 billion of this debt. This student debt crisis has put many of us in financial precarity.

As CFA members, we want to draw attention to how debt is inherently tied to the unwarranted austerity narrative that management continues to push. In reality, there is no justification for overfilled classrooms, program closures, layoffs, or dilapidated facilities to teach in. Nor is there any justification for the encumbering institutionaldebt that management binds to the CSU, and then pays for by raising tuition and cutting core operations, forcing many students to take on more in personal debt, while faculty are laid off as “cost-saving” measures. It is deeply exploitative and tries to drive a wedge between working class people.

The Chancellor’s Office and CSU Board of Trustees have plunged our students into debt by voting to increase student tuition, while individual campuses—more recently at Fresno State—have decided to raise student fees (which then pay down institutional debt), further shifting the cost of education onto students.

We need to be clear here: it does not matter how much student tuition or student fees go up; CSU management will always claim to never have enough money. The issue is not about scarcity of resources, but about turning public education into an institution used to churn out money for consultants, creditors, and developers—many of whom have ties to the chancellor and CSU trustees.

Our members recognize the harmful nature of the unchecked and mismanaged expansion of debt financialization in higher education and how it further marginalizes workers and systemically disadvantaged and underserved communities. We will do everything we can to fight against it to ensure that public education remains a public good intended to serve all of us.