Two federal judges blocked the Trump administration's planned overhaul of the Public Service Loan Forgiveness program on Tuesday, striking down new eligibility restrictions just one day before they were scheduled to take effect. The rulings halt changes that would've barred workers at certain nonprofits and government agencies from receiving loan forgiveness based on their employers' activities.
U.S. District Judge Myong Joun in Massachusetts vacated the Education Department's changes, concluding they exceeded the agency's authority and threatened First Amendment free speech protections. In Washington, D.C., District Judge Amir Ali issued a parallel ruling. More than 20 states, along with nonprofit groups and cities, challenged the regulations in court.
The Proposed Changes
The administration's overhaul would've added new criteria allowing the education secretary to exclude organizations from the program if they engaged in what the department defined as "substantial illegal purpose." That included trafficking or "chemical castration" of children, illegal immigration support, or backing terrorist organizations. The department's definition of "chemical castration" encompassed hormone therapy and puberty-blocking drugs.
Congress established the Public Service Loan Forgiveness program in 2007 to draw college graduates into government and nonprofit work by promising to cancel their federal student loans after 10 years of qualifying employment. The program has forgiven loans for more than 1 million Americans. Last year, the Trump administration moved to restrict eligibility, targeting organizations supporting causes that conflicted with its policy priorities.
Judicial Concerns
Joun questioned the department's legal foundation, noting it failed to tie its definitions of illegal activity to actual criminal statutes. "The Department cannot create new criminal prohibitions through rulemaking," he wrote. He also challenged the administration's justification for such sweeping changes, pointing to the department's own estimate that fewer than 10 employers would be barred annually.
"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. More than 100 supporting briefs were filed backing the groups challenging the rules. None were filed supporting the administration's position.
Education Secretary Nicholas Kent defended the policy. "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. He added the department was evaluating next steps.
Impact on Public Service
Nonprofit and government groups argued the changes undermined a crucial benefit that helps attract graduates to lower-paying public service roles. "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, a plaintiff in the Massachusetts case.
Aaron Ament, president of Student Defense, which brought the Washington case, called the ruling a victory for 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," Ament said.
Why This Matters:
The court decisions preserve a 19-year-old program that's canceled debt for over a million Americans, but they also spotlight broader questions about executive authority and taxpayer obligations. The administration argued it was protecting taxpayers from subsidizing activities it deemed illegal, yet couldn't identify more than 10 organizations annually that would've been affected. That disconnect between stated purpose and actual impact raises questions about whether regulatory changes were proportionate to the problem they claimed to address. The rulings also underscore judicial skepticism when agencies attempt to create new definitions of illegal conduct without clear statutory authority. For public service employers and workers who've structured careers around loan forgiveness, the decisions maintain the existing framework, though the administration's stated intent to evaluate next steps leaves regulatory uncertainty unresolved.