The Trump administration is moving to "prevent benefits" for some student loan borrowers in the Public Service Loan Forgiveness program, proposing to cut off relief for workers at employers deemed to have a "substantial illegal purpose," according to a federal notice published Monday.
New Trump Admin Rules Could Redefine PSLF Eligibility
The Education Department said it issued a notice of proposed rulemaking to halt PSLF for employees "of organizations that are undermining national security and American values through illegal means." Public comments are due Sept. 17, with a projected effective date of July 2026, the filing shows.
According to the Consumer Financial Protection Bureau website, PSLF, created in 2007 during the presidency of George W. Bush, forgives remaining federal student-loan balances after 120 qualifying payments by full-time workers in government or qualifying nonprofits.
The new proposal will let the Education Secretary disqualify an employer for 10 years (or until a corrective plan is accepted) under a "preponderance of the evidence" standard, a step critics say could sweep in health systems, universities and social-service groups.
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Are Borrowers Facing Increased Uncertainty Ahead?
Advocates warned the language is vague and ripe for politicization. "Public Service Loan Forgiveness was enacted in a bipartisan way to help incentivize hardworking people to go into public service," said Randi Weingarten, president of the American Federation of Teachers, speaking to CNBC.
"The Trump administration is trying, through executive authority, to limit who can access this benefit based on a litmus test of who they like and who they don't like."
The department's supporters say the rule targets organizations engaged in unlawful activity and protects taxpayers.
Controversial Implications For Public Service Workers
The proposal follows a March directive from President Donald Trump to narrow PSLF eligibility. At the time, a report suggested that the draft could require employers to certify they do not engage in specified illegal acts and might particularly affect entities tied to activities some states have criminalized.
The move comes as the broader student-debt system remains in flux. A report from November 2024 noted the administration's skepticism of expansive debt relief and suggested PSLF could face tighter limits in Trump's second term.
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