A federal judge blocked a Trump administration rule that would have disqualified public service workers from federal student loan forgiveness if their employers were deemed to have a "substantial illegal purpose." The ruling sided with states and nonprofits arguing the rule targeted disfavored causes.
The ruling protects public service workers from losing eligibility for federal student loan forgiveness, particularly those employed by organizations whose missions may be at odds with a presidential administration's priorities. It also represents a significant legal setback for the Trump administration's attempts to reshape federal student loan policies.
A federal judge has blocked a Trump administration rule that would have disqualified public service workers from federal student loan forgiveness if their employers were deemed to have a "substantial illegal purpose." U.S. District Judge Myong Joun in Boston ruled in favor of Democratic-led states, cities, and nonprofits that argued the U.S. Department of Education's rule was designed to target groups supporting causes the Trump administration disfavors, such as immigration rights and transgender healthcare.
The Public Service Loan Forgiveness Program allows borrowers to have their federal student loans forgiven after 10 years of working for government or nonprofit employers. The Trump administration claimed the program had "misdirected tax dollars into activist organizations" and directed the Education Department to revise regulations to exclude organizations engaging in activities with a "substantial illegal purpose." The department's final rule defined this to include aiding illegal immigration, supporting terrorism, engaging in illegal discrimination, and participating in the "chemical and surgical castration or mutilation of children."
The plaintiffs argued that the law creating the program did not grant the Education Department discretion to create eligibility exceptions and that the agency lacked a rational basis for the policy. Tuesday's ruling marks the second legal defeat for the Trump administration's efforts to remake the federal student loan system in the past week, following a separate judge's decision to bar a rule imposing lower federal student loan limits for graduate degrees in nursing and other healthcare fields.
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