By Kritika Agarwal
On October 31, the Department of Education released a final rule making changes to the Public Service Loan Forgiveness program. Many in the higher-education community – including AAU – have said the changes are problematic and could arbitrarily deny loan forgiveness to some people working for organizations that administration officials disfavor.
Created by Congress in 2007, the PSLF program forgives the federal loan balances of individuals who have spent more than a decade in public service employment. Congress defined public service jobs as full-time jobs in fields such as emergency management, government, military service, public safety, law enforcement, public health, public education, social work, or jobs in 501(c)(3) nonprofit organizations.
The Education Department’s new rule amends the program to exclude employers that it considers to be engaging in “illegal activities.” According to the rule, these activities include:
- “aiding and abetting violations of Federal immigration laws,”
- “supporting terrorism or engaging in violence for the purpose of obstructing or influencing Federal Government policy,”
- “engaging in the chemical and surgical castration or mutilation of children in violation of Federal or state law,”
- “engaging in the trafficking of children to another State for purposes of emancipation from their lawful parents in violation of Federal or State law,”
- and “engaging in a pattern of aiding and abetting illegal discrimination, and engaging in a pattern of violating State laws.”
Per the final rule, the secretary of education will determine which employers are excluded from the program. The new regulations will take effect on July 1, 2026, and are designed to implement President Trump’s March 7 executive order on “Restoring Public Service Loan Forgiveness,” which accused the PSLF program of misdirecting “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.”
Earlier this year, AAU joined the higher education community in asking the department to reconsider its proposed changes to the PSLF program. The community letter noted that Congress created the program “to ensure a brighter future with less financial burden for public servants” and to “properly recognize the contributions and challenges of public service while encouraging participation in these careers.”
The letter especially pointed to the unfairness of the new rule. More than 2.5 million borrowers currently work at organizations deemed as qualifying employers for the PSLF program. “These borrowers entered their professions making a conscious choice to forego higher salaries in order to serve the public across a range of critical needs with the expectation that the law would be observed and they would be eligible for loan relief if they met the requirements,” it noted. Millions of these borrowers “will see their eligibility put at risk should these regulations go into effect on July 1, 2026,” the associations said.
Two lawsuits have already been filed to prevent the department from making changes to the PSLF program. On November 3, more than a dozen state attorneys general sued the Trump administration challenging the final rule. Their complaint argues that the rule violates congressional intent and the Administrative Procedure Act and is contrary to law.
In a press release, the New York State Attorney General’s Office said that the new rule “would deem entire state governments, hospitals, schools, and nonprofit organizations ineligible for PSLF if the federal government unilaterally determines they have engaged in activities the administration disapproves of, such as support for immigrants, gender-affirming health care, or diversity programs.” It added: “The coalition [of state attorneys general] argues that the sweeping new rule is unlawful, politically motivated, and targeted to punish states and organizations that the administration does not like. “
In addition, a group of more than a dozen cities, labor unions, and nonprofits filed a separate lawsuit challenging the rule, noting that the administration’s new rule “breaks a decades-old bipartisan Congressional promise to support those who choose to dedicate their careers to public service.” The coalition’s complaint is available here.
Kritika Agarwal is assistant vice president for communications at AAU.