Trump Administration Alters Loan Forgiveness Eligibility, Sparking Debate
In a move with significant implications for student loan borrowers, President Donald Trump has signed an executive order impacting the Public Service Loan Forgiveness (PSLF) program. The directive seeks to exclude certain federal student loan borrowers based on their organizations’ activities.
The new directive specifies that employees of organizations with activities that have a “substantial illegal purpose” will no longer qualify for PSLF. This announcement follows Education Secretary Linda McMahon’s assurance, just weeks earlier during her Senate confirmation hearing, that the program would remain unchanged.
PSLF, established by Congress, offers loan forgiveness to borrowers after ten years of payments while employed in public service roles, including certain nonprofit organizations. However, the new executive action instructs Secretary McMahon to redefine “public service,” excluding organizations engaged in activities deemed substantially illegal.
Activities listed under the exclusion criteria include support for terrorism, child abuse, illegal discrimination, violations of federal immigration laws, and various state law violations such as public nuisance and disorderly conduct.
Critics argue that the changes infringe on borrowers’ free speech rights and target organizations opposing the administration’s policies. Persis Yu from the Student Borrower Protection Center comments, “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.”
The PSLF program, originally signed into law by President George W. Bush in 2007, outlines specific public service roles eligible for loan forgiveness. Yu emphasizes that altering these eligibility requirements would necessitate a lengthy federal rulemaking process.
While the Trump administration has avenues to influence PSLF administration, Yu asserts that redefining the law’s scope through executive action is beyond the president’s authority. She anticipates legal challenges, stating, “These borrowers have signed contracts [with the Department of Education] that embed this right to public service loan forgiveness in it.”
PSLF has faced scrutiny in the past. A 2018 review by the U.S. Government Accountability Office highlighted issues with borrowers receiving inconsistent information about job qualification for forgiveness. Additionally, NPR reported that 99% of loan forgiveness applications through PSLF were denied at the time.
The Biden administration previously expanded PSLF rules, resulting in a surge of loan forgiveness approvals. In January, nearing the end of Biden’s term, the Department of Education announced that over a million borrowers had been approved for PSLF, a significant increase from the start of the administration.
