New guidelines released Thursday by the Trump administration’s Department of Education will restrict student loan forgiveness for employees of nonprofits involved with illegal aliens, those providing gender transition surgeries for minors, or those participating in public protests.
The revised Public Service Loan Forgiveness (PSLF) program clarifies what the administration defines as “illegal activities” and which employers will be excluded from federal student loan forgiveness, in order to ensure “taxpayer dollars are not misused” by “organizations that have a substantial illegal purpose.”
Under the new rules, the secretary of education is granted authority to block employers, not specific individuals, who participate in activities the administration determines have “a substantial illegal purpose.”
The Department of Education argues that previous oversight of PSLF employer eligibility was insufficient, allowing some organizations involved in illegal activities to benefit.
The Trump administration is tightening the program so that only employees of organizations that truly serve the public will qualify for loan forgiveness.
“Taxpayer funds should never directly or indirectly subsidize illegal activity,” said Under Secretary of Education Nicholas Kent in an official statement.
“The Public Service Loan Forgiveness program was meant to support Americans who dedicate their careers to public service — not to subsidize organizations that violate the law, whether by harboring illegal immigrants or performing prohibited medical procedures that attempt to transition children away from their biological sex.”
“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 added.
President Donald Trump signed an executive order in March, “Restoring Public Service Loan Forgiveness,” clarifying which entities serve the public interest.
The new PSLF rules are slated to take effect in July 2026.
Last week, the Trump administration announced it would cancel student debt for millions of borrowers under an updated agreement with the teachers union, although American Federation of Teachers President Randi Weingarten decried the new restrictions.
“The president claims to be committed to ‘free speech,’ but we’ve quickly discovered that pledge doesn’t apply to higher education — and now, PSLF,” Weingarten said.
“He wants to impose an ideological litmus test antithetical to American values and contrary to the statute at hand. It’s an illegal attack on millions of dedicated public service workers who placed their faith in PSLF’s bipartisan promise, only to see it ripped away,” she added.
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