The Department of Education (DOE) announced the final rule change regarding the taxpayer-funded Public Service Loan Forgiveness (PSLF), finalizing the criteria for which public service employers qualify under the program.
Why It Matters
PSLF, which was established by Congress in 2007, wipes out student loan debt for holders after 10 years of “qualifying” public service employment and monthly payments.
In March, Trump signed an executive order on the matter, directing the Secretary of Education to propose revisions to the program, stating that PSLF 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.”
More than 42 million Americans hold around a collective $1.7 trillion in student loan debt.
What To Know
The DOE’s “final rule” amends the definition of a “qualifying employer” to “exclude organizations that engage in unlawful activities such that they have a substantial illegal purpose, including supporting terrorism and aiding and abetting illegal immigration.”
The premise follows suit with many of the Trump administration’s initiatives to reform programs and Biden-era policies they believe were too relaxed. Under President Joe Biden, around one million people had their debts canceled through the program. Trump had originally proposed ending the program altogether during his first term in office, but Congress rejected the move.
In the Thursday announcement, the Department noted that “in the event that the Secretary determines a qualifying employer has a substantial illegal purpose and is no longer a qualifying employer, the Department will provide a notification to both impacted borrowers and employers.”
Around 9 million borrowers are potentially eligible for PSLF, based on a 2022 estimate from Protect Borrowers, a nonprofit focused on student loans.
What People Are Saying
Under Secretary of Education Nicholas Kent said on Thursday: “Taxpayer funds should never directly or indirectly subsidize illegal activity. The Public Service Loan Forgiveness program was meant to support Americans who dedicate their careers to public service – not to subsidize organizations that violate the law, whether by harboring illegal immigrants or performing prohibited medical procedures that attempt to transition children away from their biological sex. With this new rule, the Trump Administration is refocusing the PSLF program to ensure federal benefits go to our Nation’s teachers, first responders, and civil servants who tirelessly serve their communities.’
Mike Pierce, executive director at Protect Borrowers, said in an X post on Thursday: “The Trump Admin released a rule to weaponize Public Service Loan Forgiveness against public service workers. Trump wants to use student debt as a cudgel, opening a new front in his culture war.”
American Academy of Family Physicians said in an X post on Thursday: “The AAFP and leading physician groups are alarmed by the Dept. of Education’s final rule on the PSLF program, which undermines a vital pathway that has enabled thousands of physicians to serve rural and underserved communities.”
Preston Cooper, a senior fellow at the American Enterprise Institute, wrote in an X post: “Hot take: This is fine. The regulation defines “substantial illegal purpose” narrowly – we’re just talking about clear violations of federal or state law. And borrowers can get PSLF credit for qualifying payments made *before* their employer is determined to be a crimebag.”
What Happens Next
The new rule goes into effect on July 1, 2026.
