Student Loan Forgiveness Lawsuit Claims Some Public Servants Must Pay Longer After Credits Were Cut

The American Federation of Teachers (AFT) has sued the US Department of Education, alleging it unlawfully blocked student loan relief for tens of thousands of eligible public servants by cutting their hard‑earned forgiveness credits. The case, Weingarten v. McMahon, was filed on Friday in the US District Court for the District of Columbia and names Education Secretary Linda McMahon as defendant.

The plaintiffs argue that McMahon has mismanaged the Public Service Loan Forgiveness (PSLF) programme. They say the department miscounted payment timelines and failed to award credit for time already served. These are allegations in a complaint and have not been tested in court.

How the Public Service Scheme Is Supposed To Work

For context, PSLF was signed into law by President George W. Bush in 2007. It lets certain not-for-profit and government employees have their federal student loans cancelled after 120 payments, generally made over 10 years.

The Biden administration later adapted the scheme to make it easier to qualify. CNBC reported in 2024 that the Department of Education had announced more than 1 million borrowers had been cleared under it.

The lawsuit focuses on two things. One is the PSLF Buyback programme, introduced under Biden, which lets borrowers with 120 months of qualifying employment ask to retroactively pay for months missed through forbearance or deferment. The other is a drop in qualifying payment counts that borrowers say happened without warning earlier this year, pushing back their forgiveness date.

'Secretary McMahon has flagrantly ignored her responsibility to help teachers, nurses and first responders,' said AFT President Randi Weingarten, the lead plaintiff, in a statement. The union represents some 1.8 million members, and the other plaintiffs are AFT members and public service workers.

'This lawsuit demands that McMahon stop stalling and do her job,' Weingarten said.

Buyback Backlog and Vanishing Credits

Buyback applications have piled up. A court filing showed 88,000 borrowers were still waiting for a decision as of the spring.

CNBC reported in February, citing court records, that the queue stood at 74,510 in August and 80,210 in November. That is a steady climb, and the figures differ from the spring number only because they cover different dates. The court filing is the more authoritative record, so readers should treat 88,000 as the latest official count.

Carolina Rodriguez, director of the Education Debt Consumer Assistance Program in New York, told CNBC in February that her team had not seen a successful buyback request completed. Other advocates reported some approvals, so the picture is mixed.

Then there is the human cost, which is where the filing gets personal.

'The Department of Education has ripped away the loan forgiveness credit I earned without any explanation,' said Elizabeth Schoepflin, a speech-language pathologist from New York and a co-plaintiff, in a statement. 'Every month this drags on is another payment I shouldn't have to make.'

For affected public servants, the alleged loss of credits is not limited to abstract policy. It can mean extra years of payments that they had not planned for, with consequences for rent, childcare and other essential expenses.

Education Department Blames Earlier 'Coding Errors'

The department has defended the changes. An Education Department spokesperson said the agency is correcting 'coding errors' made by the Biden administration.

'These errors resulted in inaccurate payment counts for some borrowers,' the spokesperson wrote to CNBC in an email. 'The Department remains committed to ensuring that every qualifying payment is properly credited to a borrower's account.'

So the two sides agree that something went wrong with the numbers. They disagree sharply on who caused it and who should pay for it. The department did not say in the statement how many accounts were adjusted, and the complaint's claim of 'tens of thousands' of affected borrowers is the plaintiffs' own estimate.

IBTimes UK has not seen independent verification of how many borrowers have lost credits, so those figures should be taken with a grain of salt until the court weighs in. Nothing in the filings seen so far confirms how the department reached its revised counts.

No hearing date has been reported. Neither the AFT nor the department has said whether the revised payment counts will be restored while the case proceeds. Borrowers like Schoepflin, meanwhile, are still making payments.