Administration Drops Appeals Over Public Service Loan Forgiveness Overhaul
The Trump administration withdrew its appeals in a legal battle over changes to the Public Service Loan Forgiveness program. The disputed rule would have allowed the education secretary to exclude employers deemed to have a substantial illegal purpose. Advocates welcomed the move and said the program should not be used for political retaliation.
The Justice Department ended two appeals Wednesday in the Public Service Loan Forgiveness dispute, using brief joint agreements that assigned each side its own costs. Officials offered no reason. The program forgives remaining debt for qualifying borrowers after ten years of payments in government, public schools, hospitals, police and fire departments, and nonprofits.
The challenged rule would have allowed the education secretary to exclude employers deemed to have a “substantial illegal purpose.” It was described as aimed at employers supporting undocumented immigrants or transgender youth, potentially affecting borrowers at schools, public hospitals and legal aid groups. Federal judges in Massachusetts and Washington vacated it before implementation, citing agency overreach and First Amendment concerns.
The withdrawal may reduce uncertainty for public-service workers and employers who rely on loan forgiveness, including schools, hospitals, nonprofits, and legal aid groups. Borrowers who feared exclusion based on their employer’s work could see greater stability, though future rulemaking or litigation may still affect eligibility. The outcome could also shape how agencies test the limits of program authority, with consequences for how broadly public-service employment is recognized.