Two Federal Courts Strike Down Trump Loan Rule Threatening 1 Million Public Servants
Updated
Updated · The New York Times · Jul 1
Two Federal Courts Strike Down Trump Loan Rule Threatening 1 Million Public Servants
3 articles · Updated · The New York Times · Jul 1
Summary
Two federal judges voided a Trump administration rule just before it took effect, blocking the Education Department from disqualifying employers from the Public Service Loan Forgiveness program.
Judge Myong J. Joun in Massachusetts said the department exceeded authority Congress set in the 2007 law, calling the rule arbitrary, capricious and in violation of the First Amendment; Judge Amir H. Ali in Washington also found it unlawful.
The rule, issued under a 2025 executive order, would have targeted employers deemed to have a “substantial illegal purpose,” including groups tied to undocumented immigrants, diversity initiatives and gender-affirming care for minors.
More than 22 states and a range of cities, counties and nonprofits challenged the policy, warning it could punish employers over political disagreement and destabilize borrowers who need 120 qualifying payments over 10 years for forgiveness.
More than 1 million people have already received tens of billions of dollars through the program, while the Education Department said it still backs the policy and is weighing next steps.
With courts blocking recent changes, what is the future of the Public Service Loan Forgiveness program?
What does this ruling signal about the limits of an administration's power to alter established laws?
Court Blocks Trump-Era Restrictions on Public Service Loan Forgiveness: Key Impacts for Borrowers and Nonprofits
Overview
On June 30, 2026, Judge Myong Joun blocked the Trump administration’s new rule that would have imposed restrictions on the Public Service Loan Forgiveness (PSLF) program. This ruling, prompted by a challenge from 22 Democratic Attorneys General, ensured that current PSLF eligibility criteria remained in place for public service workers. The PSLF program, established in 2007, allows individuals in public service roles to have their federal student loans forgiven after 10 years. The Trump administration’s proposed changes aimed to overhaul this mechanism, but the court’s decision preserved the original pathway for loan forgiveness.