Key Points
- President Trump’s executive order targets entire organizations for exclusion from Public Service Loan Forgiveness based on their activities or affiliations.
- The Department of Education has launched a rulemaking process that could restrict access to PSLF for millions of public workers based on the executive order.
- Experts warn the proposed changes may violate existing law and could face court challenges.
The Trump administration is moving forward with a rulemaking effort that could limit access to Public Service Loan Forgiveness (PSLF), a program designed to help government and nonprofit workers erase federal student loan debt after a decade of service.
The Department of Education last week initiated the formal regulatory process to implement a recent executive order signed by President Trump, which outlines several sweeping new restrictions for borrowers seeking PSLF.
The executive order claims the current PSLF framework improperly directs taxpayer funds to “activities that have a substantial illegal purpose”. While the order does not identify specific groups, it opens the door for broad interpretations that could bar forgiveness for workers at a wide range of nonprofits and government agencies.
Here are some potential targets based on the executive order.
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Targeting Immigrant Support and Sanctuary Jurisdictions
One category flagged in Trump’s directive involves organizations that, in the administration’s view, assist in violating immigration law. Specifically, the executive order says “aiding or abetting violations of 8 U.S.C. 1325 or other Federal immigration laws.”
From a PSLF eligibility perspective, that could include groups providing legal representation to immigrants facing deportation, as well as public defenders or advocacy organizations in sanctuary jurisdictions.
The language of the order suggests that even municipal employees in sanctuary cities, such as teachers, paramedics, and sanitation workers, could be denied PSLF because their employer’s broader policies do not align with federal immigration enforcement efforts.
Implications for LGBTQ Care and Civil Rights Programs
Another section of the order singles out organizations involved in what it calls “child abuse,” which the administration defines to include the provision of gender-affirming medical care to minors. The section reads “child abuse, including the chemical and surgical castration or mutilation of children or the trafficking of children to so-called transgender sanctuary States for purposes of emancipation from their lawful parents, in violation of applicable law.”
This could have widespread implications for healthcare systems, school districts, and local governments in states that provide such services or support policies protecting LGBTQ youth.
If implemented, the rule would bar student loan forgiveness not only for those directly providing care, but also potentially for unrelated employees (janitors, billing staff, and other employees) whose only connection is shared employment under the same nonprofit or public agency.
DEI Programs and Protest-Related Activity
Trump’s executive order also directs the Department of Education to withhold PSLF eligibility from any organizations that, in its view, support illegal discrimination. This comes from the section that says “engaging in a pattern of aiding and abetting illegal discrimination.”
That language has been interpreted by some officials as targeting diversity, equity, and inclusion (DEI) programs, especially those in government, education, and healthcare.
Similarly, the order includes a clause barring forgiveness for employees of organizations accused of repeated violations of state laws involving protests, such as trespassing or public nuisance. Critics say this provision could be applied to groups that organize or merely support peaceful demonstrations, particularly if the protests touch on controversial political or social topics. This is similar language that is also being used to target college funding.
What Will Happen
The PSLF program was enacted by Congress in 2007 with broad bipartisan support and has long offered relief to borrowers working for any government agency or 501(c)(3) nonprofit. The Trump administration likely lacks the direct authority to exclude borrowers based on an organization’s mission, legal advocacy, or policy positions. Rather, it would require an act of Congress to amend the PSLF program rules.
However, it’s clear that by initiating this process, the administration is going to seek changes.
Several groups, such as the American Federation of Teachers, have warned they will file lawsuits to block such rules.
While the new PSLF restrictions are not yet in effect, the rulemaking process has been announced. We won’t know what the final rules and possible restrictions may be until the process is complete.
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Editor: Colin Graves
The post Who Could Lose PSLF Under New Restrictions? appeared first on The College Investor.
