A new federal rule has sparked controversy as more than 20 Democratic-led states have sued to block changes that could prevent student loan forgiveness for public workers if their employer is deemed to have a “substantial illegal purpose.” The lawsuit argues that the Education Department has overstepped by altering eligibility standards for the Public Service Loan Forgiveness program, particularly affecting nonprofits serving immigrants and transgender youth. New York Attorney General Letitia James criticized the rule as a “political loyalty test” and “unjust and unlawful,” while other cities and organizations have also challenged it. Under Secretary of Education Nicholas Kent defended the rule, stating it aims to prevent taxpayer dollars from supporting organizations involved in illegal activities, including those related to transgender procedures. The vague language of the rule and potential impact on government agencies, hospitals, and schools have raised concerns, with further legal challenges expected from advocacy groups representing immigrant and LGBTQ+ communities.