:max_bytes(150000):strip_icc()/GettyImages-2227934490-d528c345d8b14d599aec95422cccbc8a.jpg "Trump Administration Finalizes Rule Limiting Student Loan Forgiveness for Some Nonprofit Workers")
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KEY TAKEAWAYS
- The Trump administration has released its final rule, which will restrict workers from the Public Service Loan Forgiveness program if the organization they work for is deemed to be engaging in “illegal” activities.
- Advocates have criticized the rule, saying it politicizes the PSLF program and could hurt workers at organizations that support immigrant families, medical care for transgender youth, or diversity in the workplace.
President Donald Trump’s administration has finalized a rule that would change which nonprofit and public workers can receive student loan forgiveness.
The Department of Education released its final rule on Thursday morning, which will restrict non-profit workers from the Public Service Loan Forgiveness program if the Trump Administration deems the work of the non-profit organization to be “illegal.”
The PSLF program forgives the remainder of student loans that public service workers, such as teachers, firefighters, and some nonprofit organization workers, hold after 120 qualifying payments. The Education Department’s rule will exclude workers from the program if their employers “engage in activities” that have “substantial illegal purpose.”
The final rule will be published in the Federal Register on Oct. 31, 2025, and will take effect on July 1, 2026.
The agency has specifically said it would apply the rule to organizations that violate federal immigration laws, support terrorism, engage in gender-affirming care for minors, or utilize illegal discrimination.
“When an organization has a pattern or practice of engaging in certain illegal conduct, they have a substantial illegal purpose because a significant amount of their activities are supporting illegal activity. Illegal activity by its very nature runs contrary to the public good,” the Department of Education said in a statement.
Why This Matters
Public service workers generally earn less money than their private sector counterparts and are more likely to hold student loan debt. If public workers are denied student loan forgiveness because their organization was deemed illegal, they will be stuck with their debt for longer than they expected.
Some legal analysts and advocacy groups say the rule politicizes the PSLF program. Workers in non-profit advocacy groups or hospitals that support immigrant families, gender-affirming medical care for transgender youth, or diversity, equity, and inclusion in the workplace may be stripped of their eligibility for PSLF under the new rules, some legal analysts say.
Student loan advocacy groups, Democracy Forward and Protect Borrowers, said in a joint statement they would pursue legal action to halt the rule.
