Trump’s Executive Action Alters Public Service Loan Forgiveness

Trump’s Executive Action Affects Public Service Loan Forgiveness Program

In a move that could reshape the landscape of student loan forgiveness, President Donald Trump has issued an executive order impacting the eligibility criteria for the Public Service Loan Forgiveness (PSLF) program. This directive instructs the U.S. Education Department to exclude certain borrowers based on the nature of their employers’ activities.

The executive action specifies that individuals employed by organizations with “a substantial illegal purpose” will no longer qualify for PSLF. This comes shortly after Education Secretary Linda McMahon stated during her Senate confirmation hearing that she intended to maintain the program as it is.

PSLF, introduced by Congress, offers loan forgiveness for borrowers who have dedicated a decade to working in public sector roles, including nonprofit jobs, while consistently making loan payments.

The new order mandates Secretary McMahon to redefine what constitutes “public service,” excluding organizations involved in activities like terrorism support, child abuse, illegal discrimination, and violations of immigration laws.

Critics argue that this change is a threat to free speech and targets organizations opposing the administration’s policies. Persis Yu of the Student Borrower Protection Center expressed concerns, stating, “Debt is being used to scare hardworking public service workers from serving the most vulnerable members of our society.”

The PSLF law, established in 2007 under President George W. Bush, outlines specific public service roles eligible for forgiveness. According to Yu, altering these eligibility conditions would necessitate an extensive federal rulemaking process.

While the Trump administration has avenues to adjust PSLF administration, Yu insists that the president cannot alter the law or its qualifying criteria through an executive order. Legal challenges are anticipated as borrowers have agreements with the Department of Education guaranteeing their right to loan forgiveness.

Historically, the PSLF program has faced scrutiny. A 2018 review by the U.S. Government Accountability Office revealed communication gaps regarding job qualification, as the Education Department hadn’t provided a list of eligible employers.

Moreover, NPR’s report in the same year highlighted that 99% of PSLF applications were denied, raising questions about the program’s implementation.