The Department of Education is seeking to disqualify employers who engage in “illegal activity” and remove them from debt cancellation if their employees have student loans.
How will President Trump’s new spending bill affect student loans?
President Donald Trump’s new spending bill will overhaul the federal student loan system.
Unbranded – Newsworthy
WASHINGTON – The Trump administration is moving ahead with sweeping changes to a major student loan debt program that will likely spark a legal battle in the coming days.
On October 30, the Department of Education finalized new rules for the Public Service Loan Forgiveness Program. The program allows people in professions such as nursing, firefighters, teachers, and certain types of nonprofit work to have their student loans forgiven after 10 years of on-time repayments. The system was mismanaged for years until recently, when former President Joe Biden reformed it and ultimately forgave billions of dollars in debt for more than 1 million Americans.
President Donald Trump has vowed to rein in PSLF. The new regulations, which have been in the works for months, will limit the types of employers from which workers can qualify for debt forgiveness. Specifically, companies and organizations that have engaged in activities with “substantially illegal purposes” will not be eligible to participate.
However, it is not clear exactly what the Department of Education will ultimately define as “illegal” activity. According to the new regulations, such conduct is likely to include supporting illegal immigration, providing gender-affirming care to minors, supporting “terrorism” and aiding and abetting “unlawful discrimination.”
“The Public Service Loan Forgiveness Program is intended to support Americans who have dedicated their careers to public service, and will not subsidize organizations that violate the law, such as harboring illegal immigrants or performing prohibited medical procedures that attempt to separate children from their biological sex,” Education Undersecretary Nicholas Kent said in a statement Thursday.
Advocates for student loan borrowers say the new rules are clearly illegal and have vowed to sue.
“Instead of supporting the first responders, health care workers, and teachers who work to make this country a better place, the Trump administration is punishing public servants for what they perceive to be the political views of their employers,” said Aaron Ament, president of the National Student Legal Defense Network. “We intend to file a lawsuit in the coming days to challenge this illegal overreach.”
The regulations create an appeals process that allows employers to challenge a Department of Education’s determination that they have violated the law. It also establishes a path for employers to become eligible for PSLF again, including agreeing to a corrective action plan.
This regulation is not scheduled to take effect until July 1, 2026.
Zachary Schermele is a Congressional reporter for USA TODAY. You can email us at zschermele@usatoday.com. Follow him on X at @ZachSchermele and on Bluesky at @zachschermele.bsky.social..
