Who Could Lose PSLF Under New Restrictions?

The Trump administration is working on rules-making efforts that can restrict access to public service loan tolerance (PSLF). It is designed to help government and nonprofit workers erase federal student loan debt after 10 years of service.

The Ministry of Education launched a formal regulatory process last week to implement the recent Presidential Order It was signed by President Trump. This outlines some drastic new limitations for borrowers seeking PSLF.

The executive order alleges that the current PSLF framework inappropriately directs taxpayer funds to “activities with substantial illegal purposes.” The order does not identify any particular group, but opens the door to broad interpretation that could hinder the forgiveness of workers in a wide range of nonprofits and government agencies.

Below are some potential executive order targets:

Supporting immigration and targeting sanctuary jurisdictions

One category flagged by Trump’s orders includes organizations that, in the administration’s view, help violate immigration laws. Specifically, the executive order states that it will “support or violate 8 USC 1325 or any other federal immigration law violations.”

From a PSLF eligibility perspective, it could include groups that provide legal representation to immigrants facing deportation, as well as public defenders or advocacy groups in the sanctuary jurisdiction.

The language of the order suggests that even local government employees in sanctuary cities, such as teachers, paramedics and sanitation workers, can reject the PSLF as employers’ broader policies are not consistent with federal immigration enforcement efforts.

Impact on LGBTQ Care and Civil Rights Programs

Another section of the order singles organizations involved in what is called “child abuse.” This defines the administration as including the provision of gender-affirming healthcare to minors. This section reads “child abuse, such as human trafficking to states in so-called transgender reserves, such as chemical and surgical castration of children or trafficking of children, in violation of applicable law, for the purposes of legal parental release.”

This could have widespread impact on the state’s health systems, school districts, and local governments that provide such services or support policies to protect LGBTQ youth.

When implemented, the rules prohibit student loan forgiveness not only for people who provide direct care, but also for only unrelated employees (administrators, billing staff, and other employees) who share employment under the same nonprofit or public agency.

DEI Programs and Protest-Related Activities

Trump’s executive order also directs the Department of Education to withhold PSLF eligibility from any organization that supports illegal discrimination. This comes from the section “Assisting illegal discrimination and engage in patterns of behaviour.”

The language has been interpreted by some officials as targeting government, education and healthcare diversity, equity and inclusion (DEI) programs, among other things.

Similarly, the order includes provisions that prohibit the forgiveness of employees of organizations accused of repeated violations of state law, including protests such as trespassing and public nuisance. Critics say the provisions can be applied to organisations or simply supportive groups, particularly when protests touch on controversial political or social topics. This is a similar language that is also used to target university funding.

What will happen

The PSLF program was enacted in 2007 with broad bipartisan support by Congress and has long provided relief to borrowers working for government agencies or 501(c)(3) nonprofits. The Trump administration is likely to lack the direct authority to remove borrowers based on the organization’s mission, legal advocacy, or policy position. Rather, amending the PSLF program rules requires legislative actions.

However, it is clear that by starting this process, the administration will seek change.

Several groups, such as the American Federation of Teachers, have warned that they will file lawsuits to block such rules.

The new PSLF limit is not yet in effect, but the rule creation process has been announced. Until the process is complete, we don’t know what the final rules and possible restrictions are.

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