A pair of federal judges on Tuesday struck down a Trump administration overhaul of a public service forgiveness program for student loans, blocking a rule that would have let the Education Department strip benefits from workers whose employers were deemed to have a “substantial illegal purpose.” The changes were set to take effect a day later, and the courts moved first.
Who Gets Hit First
Congress created Public Service Loan Forgiveness in 2007 to encourage college graduates to work in government and nonprofit jobs. It promised to forgive their federal student loans after they worked in public service jobs for 10 years. Last year, the Trump administration moved to add new eligibility rules that would have taken that benefit away from workers at nonprofits and government organizations that support causes at odds with the administration’s priorities. That meant the people doing the work, often in jobs that traditionally pay less than the private sector, would carry the cost of a political fight they didn’t start.
The overhaul gave the education secretary power to exclude groups from the program if they engage in the trafficking or “chemical castration” of children, illegal immigration or supporting terrorist organizations. Its definition of “chemical castration” included using hormone therapy or drugs that delay puberty. The department’s rule reached far beyond a simple administrative tweak. It was a major reworking of a program that has canceled loans for more than 1 million Americans.
What the Courts Said
U.S. District Judge Myong Joun in Massachusetts vacated the U.S. Education Department’s changes, saying they overstepped the agency’s power and threatened to violate First Amendment protections for free speech. In Washington, D.C., District Judge Amir Ali issued a similar ruling in a case brought by nonprofit organizations. The rulings came in response to lawsuits filed by more than 20 states along with a coalition of nonprofit groups and cities, and in a separate case brought by nonprofit organizations.
Joun said the new rules threatened to impose the administration’s policy views on employers. He also faulted the department for failing to connect its definitions of illegal activity to criminal statutes. “The Department cannot create new criminal prohibitions through rulemaking,” he wrote. That line lands hard. The apparatus tried to write new punishments into existence, and the judge said no.
Joun also questioned the department’s stated rationale for proposing the new rules, citing its own estimates that fewer than 10 employers would be barred from the program per year. “The Department offers no explanation for why a Final Rule with such sweeping consequences is necessary to address the possibility that, at most, ten employers each year may be engaging in illegal activity,” Joun wrote. The numbers tell their own story. A sweeping rule, a tiny claimed target, and a lot of damage aimed downward.
Who Spoke for the People Doing the Work
“This decision is a win for the communities that depend on local nonprofits and for the workers who serve them,” said Diane Yentel, president and CEO of the National Council of Nonprofits, one of the plaintiffs in the Massachusetts case. One of the plaintiffs in the Washington case, Student Defense, said the judge’s ruling is a victory for student loan borrowers. “Public servants should not have to worry that the federal government will punish them because of their employer’s mission or perceived political views,” said Aaron Ament, Student Defense’s president.
Those are the people at the bottom of the chain: workers, borrowers, local nonprofits, the communities that rely on them. They were the ones facing the bill for a rule written at the top.
Under Secretary of Education Nicholas Kent said the department was evaluating next steps. “The Department stands behind this commonsense policy to ensure that taxpayer dollars are never used to subsidize illegal activities,” Kent said in a written statement. That’s the language of control dressed up as common sense. The department wanted the power to decide which employers counted, which causes were acceptable, and which workers would lose relief.
Joun noted that more than 100 supporting briefs were filed on behalf of the groups challenging the rules, while none were filed in support of the Trump administration’s change. The courts moved. The rule didn’t survive the first real collision with organized resistance.