Student loan borrowers seeking loan forgiveness by working in public service jobs might soon encounter major roadblocks. The Trump administration last week suggested capping the Public Service Loan Forgiveness (PSLF) program, erasing millions of dollars of debt relief based on the employer organization. The Department of Education published new rules that would prohibit PSLF eligibility for entire nonprofits or government agencies it determines are involved in activities with a “substantial illegal purpose.”
What the new rules say
Today’s PSLF rules provide that borrowers become eligible for loan forgiveness after 120 qualifying payments made in full-time employment by eligible government or nonprofit employers. But the new proposed rules would allow the Department of Education to exclude specific employers from eligibility if they’re found to engage in activities such as
- Providing health care for transgender children (e.g., puberty blockers or hormone treatment)
- Violating federal immigration law
- Running diversity, equity, and inclusion programs
- Creating what the administration deems a public nuisance within state tort law
The Secretary of Education would have broad discretion in deciding an employer’s PSLF eligibility based on a “preponderance of the evidence.” Importantly, borrowers would not have any right to dispute those decisions.
Advocacy groups sound the alarm
Borrower activists and legal advocates condemned the intended rules. The Student Borrower Protection Center (SBPC) called the plan an irresponsible exercise of federal power. Executive Director Mike Pierce described how the rules would empower Secretary Linda McMahon to penalize entire categories of employees—first responders, teachers, and social workers—as long as the missions of their employers compete with the administration’s political agendas.
“The law does not give the Secretary discretion to decide whether a public service mission is legal or not,” Pierce said. “This is an attempt to attack state and local governments and nonprofits for performing work that the Trump administration doesn’t want them to do.”
Public service workers could be left in limbo
Opponents contend the rule adjustment would discourage people from entering such crucial professions as healthcare, teaching, and law enforcement. In May, a group of nearly 200 civil rights and worker organizations warned that efforts to weaponize PSLF would destroy vulnerable communities and overwhelm essential public services.
“This plan isn’t about accountability,” said the coalition. “It’s about punishing public servants for serving in locations that don’t fit into the administration’s agenda.”
Legal battles could be on the horizon
Although regulations are not yet set, the Department of Education is moving into the negotiated rulemaking phase. That’s a system whereby members of the public can make comments, and there is a committee of stakeholders monitoring the proposal. However, some are worried the rulemaking committee is already weighted in favor of the administration.
If implemented, legal challenges are likely. Aaron Ament, president of the National Student Legal Defense Network, warned, “Threatening to punish Americans for their employers’ political beliefs is a direct attack on the First Amendment. If these rules go into effect, we’ll see them in court.”
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What’s next for borrowers?
The new regulations won’t take effect until July 1, 2026, at the earliest. Meanwhile, business continues as usual in the PSLF program. But for public service borrowers, especially those employed by advocacy-heavy nonprofits or liberal state government agencies, the promise of student loan forgiveness has never seemed more precarious.
