President Donald Trump signs an executive order regarding institutions of higher education with Secretary of Education Linda McMahon (right) in the Oval Office of the White House on April 23, 2025, in Washington.
Saul Loeb | AFP | Getty Images
Student loan borrowers no longer have to worry about losing eligibility for public service loan forgiveness based on their employer, after two federal judges blocked the Trump administration’s rule.
On Tuesday, U.S. District Judge Amir Ali rejected the regulation, which would have added new restrictions to PSLF, which was scheduled to begin July 1. On the same day, U.S. District Judge Myung Joon sided with states, cities, and nonprofit organizations that filed legal challenges to the policy, concluding that the rule was “unlawful” and “violated the First Amendment.”
The Trump administration’s rules would change the definition of “eligible employer” under PSLF to exclude organizations that “engage in illegal activities.”
PSLF was signed into law by President George W. Bush in 2007 and offers debt cancellation after 10 years for borrowers who work in nonprofit organizations or the government.
More than 9 million borrowers could qualify for PSLF, according to 2022 estimates from the nonprofit group Protect Borrowers.
“This decision represents an important victory for public servants and the rule of law,” said Jaylon Harbin, director of federal campaigns at the Center for Responsible Lending.
“Congress made clear who is eligible for public service loan forgiveness, and the Department of Education cannot rewrite that statute with new eligibility restrictions that Congress did not approve,” Helbin said.
Here’s what borrowers in the program need to know:
“Political Loyalty Test”
New York Attorney General Letitia James and more than a dozen other state attorneys general sued the administration in November over the new PSLF rules. A coalition of cities, unions, and nonprofits across the country also filed suit that same month challenging the loan forgiveness limits.
“Public Service Loan Forgiveness was created as a promise to teachers, nurses, firefighters, and social workers that their service to their communities would be honored,” James said in a statement at the time.
“Instead, this administration has created a political loyalty test disguised as a regulation,” James said.
Critics say the vague regulatory language would have given Trump administration officials broad authority to exclude programs they don’t like. President Trump’s executive order targets immigrants, transgender and nonbinary people, and those working to increase diversity across the private and public sectors. Many nonprofit organizations work in these areas, providing legal assistance, advocacy, and educational activities.
Opponents of the policy also argued that Trump administration officials cannot modify the fact that Congress specified that PSLF is available to eligible borrowers who work for the government or 501(c)(3) nonprofit organizations.
“If Congress wanted to give borrowers credit for loan payments made while working only for certain section 501(c)(3) organizations, or delegate the authority to make such decisions to the Secretary, Congress knew how to do it,” Ali said in his decision.
“But Congress chose to provide no caveats or mandates in defining ‘public service work,'” Ali said.
The U.S. Department of Education is “considering next steps,” said Nicholas Kent, assistant secretary of education.
“The Public Service Loan Forgiveness Program is designed to support Americans who serve the public interest and does not provide grants to organizations that engage in terrorism, promote illegal immigration, or support child mutilation,” Kent said.
What it means for student loan borrowers
Higher education expert Mark Kantrowitz said that as a result of the two court orders, “borrowers do not have to worry about losing PSLF eligibility based on employment.”
Otherwise, there are typically three requirements to qualify for PSLF. Employers must be government agencies at any level, 501(c)(3) nonprofits, or other types of nonprofits that provide public service. Your loan must be a Federal Direct Loan. You must then make 120 qualifying payments on an income-driven repayment plan.
The best way to find out if your job qualifies for PSLF is to fill out what’s called an Employer Certification Form. Be sure to fill out this form at least once a year and keep a record of your verified qualifying payments, Kantrowitz says.
