The American Federation of Teachers (AFT), one of the nation’s largest labor unions, has filed a class action lawsuit against the U S Department of Education and Secretary Linda McMahon, alleging that the agency unlawfully denied student loan forgiveness to hundreds of thousands of borrowers.

The lawsuit escalates a simmering controversy over federal student debt relief programs, including income-driven repayment (IDR) plans and the Public Service Loan Forgiveness (PSLF) program.

According to the AFT’s amended complaint, the Department systematically obstructed borrowers from accessing relief for which they qualified, leaving many burdened by loans that should have been canceled under existing law.

Department accused of widespread obstruction

The complaint details a pattern in which the Department curtailed or halted processing of applications under programs such as Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and PSLF. Borrowers who met eligibility criteria, including years of public or nonprofit service, reportedly faced mass denials, suspension of the PSLF Buyback program, and failure to credit qualifying payments.

These actions, the lawsuit claims, have left countless borrowers in limbo, accruing interest, overdue payments, and damaged credit. Delays could also trigger tax liabilities if forgiveness is postponed further into 2025.

Legal challenge highlights alleged political motivations

The AFT argues that the Department’s conduct was unlawful and politically motivated. The complaint cites the use of court orders related to the Saving on a Valuable Education (SAVE) plan as a pretext to halt legitimate applications, and emphasizes the staggering backlog—reportedly over a million unresolved requests—compounding borrower hardship.

Part of a broader national dispute

This lawsuit comes amid a series of legal and administrative battles over student loan forgiveness. Past efforts to expand relief have faced court challenges, highlighting tensions between borrowers’ rights and bureaucratic barriers. The AFT seeks class certification to represent all affected borrowers and demands that the Department immediately process applications in accordance with program rules.

Borrowers’ outlook remains uncertain

While the lawsuit offers a potential path to reclaim promised relief, the legal process is expected to be lengthy. Borrowers remain caught in uncertainty, emphasizing the critical need for transparency, efficiency, and fairness in federal student loan administration.

The AFT’s lawsuit underscores the high stakes of the student loan forgiveness debate: beyond financial relief, it represents a fight for accountability in a system plagued by delays, denials, and administrative roadblocks. Policymakers, advocates, and borrowers alike are watching closely as this landmark case unfolds.