New Plaintiffs Represent Millions of Borrowers Deprived of Affordable Payments or Loan Cancellation

September 17, 2025 | WASHINGTON, D.C. — Last night, the 1.8 million-member AFT filed a motion for a preliminary injunction in its lawsuit against the U.S. Department of Education (ED) seeking court intervention to compel ED to enroll borrowers in affordable payment plans and to cancel the loans of borrowers who have met all statutory requirements. This follows the union’s filing last week to amend its complaint by making it a class action to represent the millions of borrowers across the country whom they allege ED has deprived of their statutory rights. The relief sought in last night’s motion, if granted, would apply to all affected AFT members and class members. The AFT initially filed this lawsuit in March of this year, after ED completely shut down the Income-Driven Repayment (IDR) application system.

In the amended complaint and motion, the AFT and named plaintiffs urge the court to order ED to cancel the loans of public service workers who have met the requirements for the Public Service Loan Forgiveness (PSLF) program and for borrowers who have had their loans for at least 20 or 25 years and so qualify for debt relief through the IDR program. In particular, the plaintiffs sounded the alarm about a change in federal income taxes: beginning January 1, 2026, borrowers whose loans are cancelled through the IDR program after 20 or 25 years will have to pay federal, and possibly state, income tax on the cancelled amount. The AFT and class action representatives are therefore asking the court to compel ED to ensure any loans that are eligible to be cancelled before this deadline are processed and discharged, to avoid unnecessary and unaffordable tax liability. Cancellation through PSLF will remain untaxed.

“Congress weighed in to help make college more affordable, particularly if a person works in public service jobs like teaching or nursing. The law is clear that after a certain period, if you do everything right, the government will forgive your loans, but yet again we have had to ask the courts to make the federal government uphold its end of the deal,” said AFT President Randi Weingarten. “The AFT’s members and the plaintiffs in this case have been paying on their loans, some for over 25 years, but the government is refusing to forgive their debts. It’s more than unacceptable: it’s illegal. We are committed to getting justice for borrowers everywhere, which is why we’ve made this case a class action lawsuit.”

“It is insult to injury to these borrowers that, after months of asking the government to comply with federal law and cancel their loans, ED’s refusal to do so could result in extraordinary tax liability and expenses for tens of thousands of borrowers,” said Winston Berkman-Breen, Protect Borrowers Legal Director. “These borrowers have rights, pure and simple: the right to payments based on their income, and the right to debt cancellation if they work in public service or if they have been in repayment for long periods of time. We are grateful to the AFT for leading the charge in making sure these rights are not being deprived, especially as households across the country are struggling financially to make ends meet.”

The plaintiffs also call attention to the enormous backlog of IDR and PSLF Buyback applications. Earlier reporting by ED in this case revealed that, as of August 31, 2025, there is a backlog of over 1 million unprocessed IDR applications and of over 74,000 unprocessed PSLF Buyback applications. The motion for a preliminary injunction, if granted, would also compel ED to make progress on this backlog.

A copy of the amended complaint in AFT et al. v. U.S. Department of Education is available here: https://www.courtlistener.com/docket/69753739/41/american-federation-of-teachers-v-us-department-of-education/

A copy of the motion for a preliminary injunction is available here: https://www.courtlistener.com/docket/69753739/44/american-federation-of-teachers-v-us-department-of-education/

Further Reading

Read the press release announcing the lawsuit: AFT Sues U.S. Department of Education, Demands Justice for Student Loan Borrowers Blocked from Affordable Loan Payments (March 19, 2025)

Read the press release announcing IDR application restoration: AFT v. ED Update: Under Pressure, ED Will Restore IDR Application Tomorrow But Will Not Immediately Resume IDR Paperwork Processing (March 25, 2025)

Read an article by Adam Minsky in Forbes on the lawsuit: Group Files Class Action Lawsuit Over Student Loan Forgiveness Denials and Backlogs (Sept. 10, 2025)

Read the lawsuit’s Federal Court Docket: AFT et al., v. U.S. Department of Education (1:25-cv-00802)

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About Protect Borrowers

Protect Borrowers (formerly Student Borrower Protection Center) is a nonprofit organization led by a team of experts, lawyers, and advocates fighting to build an economy where debt doesn’t limit opportunity. We investigate financial abuses, take predatory companies to court, and push for policies to protect working people from debt traps. We aim to deliver immediate relief to families while building power, driving systemic change, and fighting for racial and economic justice.

Learn more at protectborrowers.org or follow us on social @BorrowerJustice.

About the AFT

The AFT represents 1.8 million pre-K through 12th-grade teachers; paraprofessionals and other school-related personnel; higher education faculty and professional staff; federal, state and local government employees; nurses and healthcare workers; and early childhood educators.

Learn more at aft.org or follow AFT on Twitter @AFTunion.

About Berger Montague

Berger Montague is the nation’s preeminent law firm representing plaintiffs in complex civil litigation. For over half a century, Berger Montague has played lead roles in precedent-setting cases and has recovered over $50 billion for its clients and the classes they have represented. The firm’s award-winning attorneys include leaders in the fields of antitrust, commercial litigation, consumer protection, defective products, environmental law, employment law, securities, and whistleblower cases, among many other practice areas. Berger Montague is headquartered in Philadelphia and has offices in Chicago, Minneapolis, San Diego, San Francisco, Toronto, Washington, D.C., and Wilmington.