The American Federation of Teachers and nine student loan borrowers filed a lawsuit on Friday against the U.S. Department of Education and Secretary Linda McMahon. They allege the agency is delaying Public Service Loan Forgiveness decisions and removing credit that borrowers earned toward debt cancellation.
The complaint, filed in U.S. District Court for the District of Columbia, says the department is withholding or delaying PSLF “Buyback” determinations, failing to credit time worked in public service and clawing back time it had already credited. AFT President Randi Weingarten is a lead plaintiff in her official capacity. The complaint says it is the third suit AFT has brought against the department in fewer than two years.
The union is seeking certification of its lawsuit as a class action that alleges delays affecting public servants by the tens of thousands, according to MarketWatch.
“Secretary McMahon has flagrantly ignored her responsibility to help teachers, nurses and first responders,” Weingarten said in a statement, according to CNBC.
Congress created PSLF in 2007. Under the program, a borrower who makes 120 qualifying payments while working in public service—including teachers working for school districts—has the remaining federal loan balance canceled. A 2022 rule created the Buyback option, which lets borrowers pay for months spent in certain forbearances so those months count toward the 120.
In June 2024, the department placed borrowers enrolled in the SAVE repayment plan into a forbearance without their consent, according to the complaint. Months in that forbearance did not count as qualifying, but the department has said they can be recouped through Buyback.
The complaint cites department status reports showing that pending Buyback applications rose from 49,318 in April 2025 to 89,720 in March 2026. As of April 30, 2026, about 88,000 requests were pending. The complaint says that at the fastest processing rate the department showed, clearing that backlog would take more than 18 months.
Plaintiff Antonio Lozada, a government lawyer in Florida, says he needs to buy back four months to qualify for cancellation of about $191,000 in loans. He filed his application in November 2024 and has received no determination, the complaint says.
Other plaintiffs say the department reduced their payment counts. Elizabeth Schoepflin of New York had 119 of the 120 required payments when she received a notice in August 2026 that 14 qualifying months had been removed, according to the complaint. Plaintiff Renee Johnson’s count fell from 118 to 116, the complaint says.
An Education Department spokesperson told CNBC that the agency is fixing “coding errors” made by the Biden administration. “These errors resulted in inaccurate payment counts for some borrowers,” the spokesperson wrote in an email to CNBC.
The Education Department last October finalized new rules for the Public Service Loan Forgiveness program that would deny eligibility for employers who engage in activities with a “substantial illegal purpose.” Blacklisted employers would be barred from participating in the loan forgiveness plan for 10 years, or until the U.S. Secretary of Education approves a “corrective action plan.”
Two judges invalidated that rule change this summer just before it was to take effect, with one calling it vague and saying it threatened to violate employers’ First Amendment rights.
