Federal Judge Halts Trump Administration's Rule on Public Service Loan Forgiveness Program
A federal judge has halted the Trump administration's enforcement of a new rule that would have disqualified public service workers from federal student loan forgiveness if their employers were deemed to have a "substantial illegal purpose." The ruling came in response to a lawsuit filed by Democratic-led states, cities, and nonprofits, arguing that the rule could target organizations supporting causes opposed by the Trump administration. The Public Service Loan Forgiveness Program allows borrowers to have their federal student loans forgiven after 10 years of employment with government or nonprofit organizations, benefiting over 1 million borrowers since its inception in 2007.
In March 2025, President Trump issued an executive order criticizing the program for allegedly funding activist organizations that harm national security and American values. The order directed the Education Department to redefine "public service" work and exclude organizations engaged in activities with a "substantial illegal purpose." The Education Department's final rule, published in October, listed activities such as aiding illegal immigration, supporting terrorism, engaging in illegal discrimination, and participating in certain medical procedures as grounds for disqualification from the forgiveness program.
The plaintiffs, including states, cities, and nonprofits, filed a lawsuit to block the rule, arguing that the Education Department lacked the authority to create eligibility exceptions and that the policy was not based on a rational foundation. Another judge in Washington, D.C., also blocked a separate rule that would have imposed lower federal student loan limits for individuals pursuing graduate degrees in healthcare-related fields. These legal challenges highlight the ongoing debate over the administration's efforts to reshape federal student loan forgiveness programs.
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