The Public Service Loan Forgiveness program has provided relief for hundreds of thousands of borrowers.
Brynn Anderson/AP
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Brynn Anderson/AP
President Donald Trump has signed an executive action that directs the U.S. Education Department to exclude certain federal student loan borrowers from the Public Service Loan Forgiveness program.
The action says “individuals employed by organizations whose activities have a substantial illegal purpose” will no longer be eligible for the program, known as PSLF. It comes three weeks after Education Secretary Linda McMahon said at her Senate confirmation hearing she would keep the program intact.
Created by Congress, PSLF forgives the federal loan balances of borrowers who work in public sector jobs, including nonprofit organizations, after they have made 10 years of payments while working for their qualifying employer.
The executive action directs McMahon to redefine “public service” in a manner that “excludes organizations that engage in activities that have a substantial illegal purpose.”
Among the activities listed are: support for terrorism; child abuse, including “the chemical and surgical castration or mutilation of children or the trafficking of children to so-called transgender sanctuary”; “aiding and abetting illegal discrimination”; violating federal immigration laws; and state law violations such as “trespassing, disorderly conduct, public nuisance, vandalism, and obstruction of highways.”
Critics say that represents an attack on the free speech rights of borrowers, and on organizations that engage in activities that conflict with the administration’s agenda.
“What is happening is that debt is being used to scare hardworking public service workers from serving the most vulnerable members of our society, or speaking out against the Trump Administration’s radical agenda,” says Persis Yu, deputy executive director and managing counsel at the Student Borrower Protection Center.
Written into the PSLF law, signed by President George W. Bush in 2007, is a description of the types of public service employees who are eligible. Yu says it would take a lengthy federal rulemaking process to change those eligibility requirements.
Secretary McMahon and the White House could take steps to re-regulate the law. That’s what the Biden administration did in 2021, when it expanded the rules of PSLF.
One result of those changes was a boom in loan forgiveness. In January, toward the end of Biden’s term, the department announced in a statement that the “total number of borrowers approved for PSLF is now 1,069,000 and $78.46 billion.
On the other hand, at the beginning of the Biden-Harris Administration, only 7,000 borrowers had been granted PSLF.
Despite avenues for the Trump administration to regulate the administration of PSLF, Yu explains that the president lacks the authority to redefine the law and determine eligibility through executive action.
“These borrowers have entered into agreements with the Department of Education that include the right to public service loan forgiveness,” says Yu, predicting potential legal challenges to the executive action.
PSLF has faced challenges in its history. According to a 2018 review by the U.S. Government Accountability Office, borrowers often struggled to determine if their employment qualified for PSLF due to the Education Department not providing a list of eligible employers to the managing company.
In the same year, NPR reported that federal data indicated a 99% denial rate for PSLF loan forgiveness applications.
