Student loan borrower advocacy organizations are warning that the Trump administration is taking concrete steps to try to limit student loan forgiveness for public servants under a popular debt relief program. And the groups are increasingly raising the alarm.
Public Service Loan Forgiveness, or PSLF, allows borrowers to receive a complete discharge of their federal student loans after making the equivalent of 10 years of qualifying payments. These payments must be made under certain repayment plans while the borrower works full-time in eligible nonprofit or government employment. To date, more than a million borrowers have received student loan forgiveness through PSLF, most through improvements to the program implemented during the Biden administration.
But President Donald Trump has taken a different approach, arguing that PSLF is wasteful, costly, and rewards organizations whose interests are not aligned with the administration’s. And the Department of Education may be moving towards limiting the program. Here’s the latest.
Trump Orders Steps To Limit Student Loan Forgiveness Under PSLF
In March, President Trump issued an executive order to limit student loan forgiveness under PSLF by cutting off organizations that engage in certain activities. He characterized the move as eliminating fraud and waste for taxpayers, and protecting American interests.
“The PSLF Program has misdirected tax dollars into activist organizations that not only fail to serve the public interest, but actually harm our national security and American values, sometimes through criminal means,” said Trump in the order. “The PSLF Program also creates perverse incentives that can increase the cost of tuition, can load students in low-need majors with unsustainable debt, and may push students into organizations that hide under the umbrella of a non-profit designation and degrade our national interest, thus requiring additional Federal funding to correct the negative societal effects caused by these organizations’ federally subsidized wrongdoing.”
The order would bar student loan forgiveness eligibility under PSLF for organizations that engage in certain activities, such as “aiding or abetting” violations of federal immigration laws, “child abuse” (which the order appears to define as facilitating gender-affirming care for transgender youth), and “aiding and abetting illegal discrimination” which could be read to include diversity, equity and inclusion initiatives.
Student loan borrower advocacy organizations warned that the order is vague and broadly worded, and could be used to “weaponize” PSLF against organizations and institutions whose policy aims simply don’t align with the Trump administration. This could, for instance, include any immigrant rights organization, hospitals that provide medical treatment to transgender youth, or state governments that maintain diversity programs.
Department of Education Begins Rulemaking Process To Restrict Student Loan Forgiveness Under PSLF
President Trump’s executive order does not have immediate effect. Rather, it directs the Department of Education to draft regulations implementing the order. To do that, federal law requires that the department go through a lengthy process called negotiated rulemaking. This process, which can take a year or longer, involves the creation of a rulemaking committee comprised of key stakeholders, and opportunities for individuals and organizations to submit public comments.
In May, a coalition of nearly 200 organizations submitted a formal public comment to the Department of Education as part of the initial phase of negotiated rulemaking, arguing that the rulemaking process was simply a pretext to rubber stamp President Trump’s PSLF executive order and restrict student loan forgiveness under the program.
“We write in strong opposition to the Trump Administration’s attempts to implement Project 2025, which calls for gutting Income-Driven Repayment (IDR) options and ultimately eliminating PSLF, which will only push borrowers further into debt and relief further out of reach,” wrote the organizations.
The coalition echoed the responses of other student loan borrower groups, which have argued that the Trump administration’s proposed changes to PSLF are unlawful. Only Congress can change PSLF, the contend, and the statute governing the PSLF program does not confer any authority on the department to pick and choose which otherwise-qualifying organizations can be eligible for student loan forgiveness under the program.
“We were incredibly troubled to see President Trump’s executive order aimed at limiting access to PSLF for public service workers employed at organizations engaging in work that is not in line with President Trump’s agenda,” wrote the group. “The Department’s efforts to engage in rulemaking to make unlawful changes to PSLF eligibility are directly related to the goals of this executive order, exceed the Administration’s authority outright, and have already had a chilling effect on public service organizations doing necessary work on behalf of our most vulnerable communities. The Higher Education Act is crystal clear that a ‘public service job’ includes any employment in government or at a 501(c)(3). We strongly oppose any effort by the Trump Administration to limit PSLF eligibility to cherry pick organizations that they may not agree with.”
Department of Education To Limit Participation In Committee That Will Decide The Fate Of Student Loan Forgiveness
With the initial public comment period complete, the Department of Education is now in the process of creating a formal negotiated rulemaking committee to proceed with regulatory changes to student loan forgiveness under the PSLF program. The rulemaking committee is supposed to include representation from key stakeholders. But student loan borrower advocacy groups are raising alarms that the department is trying to limit the participation of pro-PSLF voices.
In the past, department rulemaking committees have included representatives from key constituent groups such as legal assistance organizations, state officials, consumer advocates, individuals with disabilities, and student loan borrowers in repayment. While the department confirmed in its committee nominations announcement that some of these constituencies would have representation on the committee, others were not clearly included.
Last week, dozens of organizations wrote to the department, demanding that additional representatives be allowed to participate in the negotiated rulemaking process to voice support for preserving student loan forgiveness under the PSLF program.
“We are concerned that the Trump Administration is using this negotiated rulemaking session to make harmful changes to Income-Driven Repayment plans and the Public Service Loan Forgiveness Program— both of which act as critical components of the student loan safety net and provide critical debt relief to workers in public sector jobs,” wrote the group in its letter. “Given the breadth of experiences that will be affected as a result of this rulemaking, borrower voices, whether directly or through advocacy organizations, must be prioritized. In particular, entities that represent legal aid organizations, consumer advocacy organizations, and civil rights organizations should be separate and distinct categories to ensure proper representation for each of these essential stakeholder groups. Individuals with disabilities or groups representing them should also be included.”
“The Trump Administration’s proposal to cram civil rights, legal aid, and consumer advocacy groups into fewer seats is a naked attempt to stack the decks against borrowers and engineer a predetermined outcome for this rulemaking,” said Student Borrower Protection Center Deputy Executive Director and Managing Counsel Persis Yu in a statement last week. “The financial lives of millions of borrowers are at stake.”
What Comes Next For Student Loan Forgiveness Under PSLF
For now, there are no changes to student loan forgiveness under PSLF.
“We are reviewing the recent Executive Order regarding the Public Service Loan Forgiveness (PSLF) Program,” says a banner notice on the Department of Education’s website. “There are no changes to PSLF currently, and borrowers do not need to take any action.”
Any changes to student loan forgiveness eligibility that result from Department of Education updates to PSLF regulations are likely at least a year away. And depending on the scope of those changes, some observers expect there to be legal challenges, given that the PSLF statute passed by Congress nearly 20 years ago does not provide clear authority to the Department of Education to limit eligibility to otherwise-qualifying nonprofit and public organizations. In the meantime, borrowers should keep an eye out for subsequent negotiated rulemaking developments, as there will be additional opportunities to submit a public comment in the coming months.
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