Trump executive action targets Public Service Loan Forgiveness : NPR

President Donald Trump has signed an executive action that directs the U.S. Education Department to exclude certain federal student loan borrowers from the Public Service Loan Forgiveness program.

The action says “individuals employed by organizations whose activities have a substantial illegal purpose” will no longer be eligible for the program, known as PSLF. It comes three weeks after Education Secretary Linda McMahon said at her Senate confirmation hearing she would keep the program intact.

Created by Congress, PSLF forgives the federal loan balances of borrowers who work in public sector jobs, including nonprofit organizations, after they have made 10 years of payments while working for their qualifying employer.

The executive action directs McMahon to redefine “public service” in a manner that “excludes organizations that engage in activities that have a substantial illegal purpose.”

Among the activities listed are: support for terrorism; child abuse, including “the chemical and surgical castration or mutilation of children or the trafficking of children to so-called transgender sanctuary”; “aiding and abetting illegal discrimination”; violating federal immigration laws; and state law violations such as “trespassing, disorderly conduct, public nuisance, vandalism, and obstruction of highways.”

Critics say that represents an attack on the free speech rights of borrowers, and on organizations that engage in activities that conflict with the administration’s agenda.

“What is happening is that debt is being used to scare hardworking public service workers from serving the most vulnerable members of our society, or speaking out against the Trump Administration’s radical agenda,” says Persis Yu, deputy executive director and managing counsel at the Student Borrower Protection Center.

Written into the PSLF law, signed by President George W. Bush in 2007, is a description of the types of public service employees who are eligible. Yu says it would take a lengthy federal rulemaking process to change those eligibility requirements.

Secretary McMahon and the White House could take steps to re-regulate the law. That’s what the Biden administration did in 2021, when it expanded the rules of PSLF.

One result of those changes was a boom in loan forgiveness. In January, toward the end of Biden’s term, the department announced in a statement that the “total number of borrowers approved for PSLF is now 1,069,000 and $78.46 billion. By contrast, only 7,000 borrowers had received PSLF at the start of the Biden-Harris Administration.”

While there are avenues for the Trump administration to regulate the way PSLF is administered, Yu says the president cannot redefine the law and who qualifies for it with an executive action.

“These borrowers have signed contracts [with the Department of Education] that embed this right to public service loan forgiveness in it, ” says Yu, adding he expects legal challenges to the executive action.

PSLF has a troubled history. In a 2018 review, the U.S. Government Accountability Office found that when borrowers called the company managing PSLF to make sure their jobs qualified, they sometimes didn’t get an answer — because the Education Department hadn’t given the company a list of eligible employers.

That same year, NPR reported that federal data showed 99% of applications for loan forgiveness through PSLF had been denied.