President Donald Trump signed an executive order on March 7, 2025, to restrict the Public Service Loan Forgiveness (PSLF) program by excluding certain organizations that have been found to engage in “improper activities.”
The move has far-reaching implications for millions of public servants who are relying on PSLF for relief from student loans.
Understanding the Public Service Loan Forgiveness program
Established in 2007, the PSLF program was established to recruit individuals into public service careers under the guarantee of federal student loan forgiveness upon the fulfillment of 120 consecutive qualifying monthly payments (approximately 10 years) of full-time work by participating employers. Participating employers include government agencies and 501(c)(3) non-profit organizations. The program has benefited most significantly professions such as teachers, nurses, public interest lawyers, military veterans, and firefighters.
Key provisions of the executive order
The executive order directs the Department of Education to revisit PSLF regulations to exclude employees of organizations whose services the administration considers are against national interests. Specifically, the order aims to target organizations engaged in:
- Illegal immigration: Organizations that “aid or abet violations” of federal immigration law.
- Terrorism: Organizations that “support terrorism” or subsidize cartels.
- Child abuse: Websites providing or enabling gender-affirming treatment to trans children, which the administration has termed “child abuse.”
- Illegal discrimination: Organizations engaging in a practice of facilitating and enabling illegal discrimination, possibly against civil rights organizations or institutions with Diversity, Equity, and Inclusion (DEI) programs.
- Public disruptions: Organizations engaging in acts that violate state codes against trespassing, disorderly conduct, public nuisance, vandalism, and obstruction of highways.
Administration’s rationale
The Trump administration argues that the PSLF program has been misused to redirect taxpayer money to activist organizations that are claimed to undermine national security and American values. The executive order states:
“The PSLF Program has diverted tax dollars into activist organizations that not only do not serve the public interest but actually harm our national security and American values, sometimes through criminal means.”
Further, the administration contends that the program creates perverse incentives through higher tuition costs and encourages students to accumulate unsustainable debt in low-demand areas of study. Implied but not necessarily explicit, the order assumes that some of the non-profit schools exploit their status to engage in practices which are not of the maximum value to the country and therefore need additional federal aid to offset damage to society.
Legal challenges and opposition
The executive order has also caused outrage among various advocacy organizations and attorneys who contend that the President is not authorized to unilaterally alter the standards of qualification for the PSLF program. They contended such a radical change must be achieved through legislation that was vetted in Congress.
Student Debt Crisis Center President and founder Natalia Abrams claimed:
“This executive order is illegal and in a huge way, disturbing to all nonprofit workers. Sustained attacks on education and on programs that essentially unmoor Americans who have student loans and their families’ very existence and economic security.”
American Federation of Teachers President Randi Weingarten was also thinking along the same lines:
“The president claims his commitment to ‘free speech,’ but we’ve discovered very rapidly that commitment doesn’t apply to college and now apparently PSLF. He’d rather place an ideological test of allegiance against American values and against the bill before us.”
Legal specialists observe that standards for the PSLF program are statutorily established and must be submitted to Congress if there is a change. Vague and sweeping categories of the executive order can be abused by declining student loan cancellation to numerous entities, such as state and local governments, and precipitating additional lawsuits.
Implementation and potential impact
The executive order instructs the Department of Education to begin a rulemaking process for updating regulations on PSLF. It is a multi-public hearing and comment period process, which takes one to two years. So, any alteration to PSLF eligibility would not happen until 2027.
If implemented, the directive would impact millions of federal service employees likely eligible for forgiveness of their loans under the PSLF program. Teachers, health care workers, civil rights activists, and employees at most non-profits could have their eligibility taken away, depending on the interpretation and enforcement of the new regulations.
Congressional actions and future outlook
Apart from that, Congress also is considering legislative changes to the PSLF program as part of attempts to redefine student loan forgiveness and relief programs. Without promised legislation, whenever previously federal student loan programs have been modified, such modifications only account for new borrowers, grandfathering current borrowers into prior programs. Whether or not this precedent will be adhered to with any future legislative changes to PSLF remains to be seen.
As this drama develops, borrowers and government employees are urged to listen for any potential news on the reforms within the PSLF program and call their loan servicers or attorneys to discover how this will influence their loan forgiveness plans.
