Hundreds of thousands of federal student loan borrowers may be impacted by President Donald Trump’s latest student loan forgiveness action, imperiling a popular program that, until fairly recently, had enjoyed bipartisan support.
The Public Service Loan Forgiveness program, often referred to as PSLF, provides a pathway to loan forgiveness for borrowers who commit to careers in the nonprofit or public sectors. Borrowers can qualify for complete federal student loan forgiveness after making 120 qualifying payments (the equivalent of 10 years) on eligible loans under a covered repayment plan while working full-time for certain organizations engaged in public service work. At least three million teachers, nurses, public interest attorneys, military servicemembers, and first responders are on track for loan forgiveness under the program, according to the Education Data Initiative. And following a series of waivers and improvements enacted by the Biden administration, more than a million borrowers have had their student loans discharged through PSLF.
But last week, President Trump issued an executive order that threatens to severely undermine the PSLF program and cut off student loan forgiveness on a broad scale. Whether the order will actually get implemented, however, is far from clear. Here’s what borrowers on track for student loan forgiveness under the program need to know.
What Trump’s Order Says About Student Loan Forgiveness Under PSLF
President Trump’s executive order, titled “Restoring Public Service Loan Forgiveness,” targets student loan forgiveness under PSLF based on an organization’s activities.
“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,” reads 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.”
Trump seeks to limit PSLF eligibility for organizations the administration determines are engaged in “illegal activities,” and decrees that “individuals employed by organizations whose activities have a substantial illegal purpose shall not be eligible for public service loan forgiveness.” The order goes on to identify several categories of activities that the administration believes should result in an organization being excluded from qualifying PSLF employment and, thus, from student loan forgiveness eligibility. These categories of activities include:
- “Aiding or abetting violations” of federal immigration law. Read broadly, this could include any number of immigrant rights organizations;
- “Supporting terrorism” (which is not defined) or “facilitating funding” to cartels;
- “Child abuse,” which the administration specifically defines as providing or supporting gender-affirming healthcare for transgender youth; this could impact any number of LGBTQ organizations;
- “Engaging in a pattern of aiding and abetting illegal discrimination,” which could be read to implicate any civil rights organization or any nonprofit or public entity that supports DEI initiatives;
- “Engaging in a pattern of violating State tort laws, including laws against trespassing, disorderly conduct, public nuisance, vandalism, and obstruction of highways.”
Trump’s Student Loan Forgiveness Order Restricting PSLF May Be Illegal
President Trump’s effort to restrict eligibility for student loan forgiveness under PSLF may violate the original statute passed by Congress that created the program. That statute details the types of organizations that qualify for PSLF, and does not permit a president to change the law to limit the PSLF eligibility of 501(c)(3) nonprofit organizations or government entities.
Trump’s order does not appear to automatically alter PSLF eligibility, a seemingly tacit acknowledgment that this cannot be done through executive action. Instead, the order directs the Department of Education to revise the regulations governing student loan forgiveness under the PSLF program to carve out the outlined exceptions. Changing Department of Education regulations is a lengthy, complicated process requiring multiple public hearings and opportunities for public comment; the process typically takes one to two years, so the soonest any changes would be made to PSLF would likely be in 2027.
But even if the Trump administration’s Department of Education goes through the appropriate rulemaking procedures, such sweeping changes to PSLF eligibility may still be illegal because – again – the statute passed by Congress that established the PSLF program does not authorize whole categories of qualifying organizations to be excluded from eligibility. Furthermore, the categories of organizations referenced in the executive order are so broad and vague that it could theoretically be used to deny student loan forgiveness eligibility on a wide scale to nearly any organization that does not align with the Trump administration’s policies, including potentially even state and local governments. That could also potentially run afoul of federal law.
Advocates Slam Efforts To Restrict Student Loan Forgiveness Eligibility For PSLF, Threaten Litigation
Student loan borrower advocacy groups were quick to criticize President Trump’s PSLF order. Some threatened to bring legal action against the administration if the order is implemented.
“This executive order is both illegal and deeply troubling for all nonprofit workers,” said Natalia Abrams, President & Founder of the Student Debt Crisis Center in a statement last week. “Relentless political attacks on education and existing programs are not just policy decisions—they disrupt the lives and financial stability of Americans with student debt and their families. This must stop. We remain committed to ensuring that all borrowers have access to essential programs like PSLF.”
“The president claims to be committed to ‘free speech,’ but we’ve quickly discovered that pledge doesn’t apply to higher education and now, PSLF,” said Randi Weingarten, President of the American Federation of Teachers, in a statement. “He wants to impose an ideological litmus test antithetical to American values and contrary to the statute at hand. It’s an illegal attack on millions of dedicated public service workers who placed their faith in PSLF’s bipartisan promise, only to see it ripped away.” Weingarten noted that the AFT sued the first Trump administration over student loan-related issues, and “won’t stop fighting, in court and in Congress,” now.
“This action is unconstitutional and illegal, Trump can not make major modifications to a program that was written into law by Congress,” said Kristin McGuire, Executive Director of Young Invincibles. “He is abusing his power to punish borrowers for ideological reasons and blocking necessary relief that has been mandated for all 501c3 employees by law since 2007. Trump is weaponizing loan forgiveness under the guise of morality, toying with the hopes of borrowers who are working towards relief from crushing debt.”
“Threatening to punish hardworking Americans for their employers’ perceived political views is about as flagrant a violation of the First Amendment as you can imagine,” said Student Defense President Aaron Ament. “If the Trump Administration follows through on this threat, they can plan to see us in court.”
Congress Could Make Changes To Student Loan Forgiveness Eligibility For PSLF
Separately, Congress is also contemplating making changes to student loan forgiveness eligibility for PSLF as part of an upcoming bill primarily intended to extend tax cuts. The effort is part of a broader push to curtail a number of student loan forgiveness and relief programs. Congress is also considering removing the tax-exempt status for nonprofit hospitals, which could cut off PSLF for millions of healthcare workers.
However, draft legislation has not yet been released. Historically, Congress typically only applies changes to federal student loan forgiveness, repayment, and relief programs for new loans going forward, effectively grandfathering in current borrowers to existing programs. It remains to be seen, though, whether Congress will do that for PSLF.
Note: The author previously worked with Student Defense on an unrelated case.
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