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- The Trump administration finalized its rule to limit Public Service Loan Forgiveness.The rule would block PSLF for employers that engage in what the administration defines as "illegal activity."Advocacy groups said they are suing the administration over the new rule in the coming days.
Some student-loan borrowers in public service might lose access to debt relief.
On Thursday, President Donald Trump's Department of Education announced that it had finalized its rule to limit the Public Service Loan Forgiveness program, which forgives student debt for government and nonprofit workers after 10 years of qualifying payments.
Following an executive order in March that called on the Department of Education to redefine "public service" to align with the administration's political views, the department held negotiations with stakeholders to craft the final rule. It will go into effect on July 1, 2026.
"Taxpayer funds should never directly or indirectly subsidize illegal activity," Under Secretary of Education Nicholas Kent said in a statement, using violations of immigration law and efforts to help transgender people as examples of "illegal activity."
"With this new rule, the Trump Administration is refocusing the PSLF program to ensure federal benefits go to our Nation's teachers, first responders, and civil servants who tirelessly serve their communities," Kent said.
A fact sheet from the Department of Education said that the final rule amends the definition of a qualifying employer "to exclude employers that participate in illegal activities such that they have a substantial illegal purpose." In addition to immigration law violations and supporting transgender people, the department said other examples of illegal activity include patterns of discrimination and a "pattern" of state law violations.
The education secretary will determine if an employer no longer qualifies for PSLF, and employers will be provided notice and an opportunity to rebut the department's findings, the fact sheet said.
The final rule text said that although the changes "may delay or prevent loan forgiveness for a subset of borrowers, the overall design of the regulations, including advance notice, transparency around determinations, and employer recertification pathways, help prevent unexpected or retroactive harm."
Advocates for student-loan borrowers criticized the final rule and plan to take legal action. In a joint statement, advocacy groups Democracy Forward and Protect Borrowers said the rule "is a direct and unlawful attack on nurses, teachers, first responders, and public service workers across the country."
"That's why we will soon see the Trump-Vance Administration in court," they said.
Aaron Ament, president of borrower protection group Student Defense, said that the administration "is punishing public servants for their employers' perceived political views."
"We will file a lawsuit in the next few days and challenge this illegal overreach," Ament said.
Student-loan borrowers in PSLF previously told Business Insider that they're concerned about losing relief if their eligibility changes.
"I'm so close to the finish line," Jeff Hughes said. "I really hope that the program continues as is because we need some more good people out there doing good work."
