By Catherine Brown, Senior Director, Policy and
Advocacy
Reading time: Two minutes
Late on Friday, March 9, President Trump signed an executive order (EO) directing the Secretary of Education to propose revisions
to the types of organizations that are eligible employers for the purpose of receiving Public Service Loan Forgiveness (PSLF). The order states that organizations that have a “substantial illegal purpose” shall be excluded from the program. It specifically
mentions aiding or abetting violations of immigration laws, supporting terrorism, child abuse, including trafficking children to “so-called transgender sanctuary States,” engaging in a pattern of illegal discrimination, or “engaging in a pattern of
violating State tort laws, including laws against trespassing, disorderly conduct, public nuisance, vandalism, and obstruction of highways.”
This approach to PSLF eligibility is flatly at odds with the authorizing statute, which President George W. Bush signed into law in 2007 to provide
an incentive for public service work. The law defines a public service job as:
“(i) a full-time job in emergency management, government, military service, public safety, law enforcement, public health, public education (including early childhood education), social work in a public child or
family service agency, public interest law services (including prosecution or public defense or legal advocacy in low-income communities at a nonprofit organization), public child care, public service for individuals with disabilities, public service
for the elderly, public library sciences, school-based library sciences and other school-based services, orat an organization that is described in
section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation
under section 501(a) of such Code;”.
Language on the website of Federal Student Aid, which administers PSLF, affirms the underlying statute stating that “not-for-profit
organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code” are eligible employers with no exceptions.
PSLF provides loan forgiveness to borrowers who make 10 years of student loan payments while working at a qualifying employer. Teachers, health care workers, and state and local government employees are among the largest groups that have received loan forgiveness to date under this program.
Friday’s EO does not describe what aiding and abetting violations of immigration laws, child abuse or the other categories mentioned means, but we can assume they will take a broad view and try to disqualify nonprofit organizations engaged in advocacy
or support for transgender children, people who are undocumented, diversity initiatives, and political protests. Doing so will invite legal challenges. “Threatening to punish hardworking Americans for their employers’ perceived political views is
about as flagrant a violation of the First Amendment as you can imagine," Aaron Ament, President and Cofounder of The National Student Legal Defense Network, said in a
statement Friday. "If the Trump administration follows through on this threat, they can plan to see us in court.”
PSLF was hobbled under the first Trump Administration. The program had a 98% denial rate
at times and only 7,000 borrowers had ever received forgiveness when President Biden took office in 2021. Because the program was created in 2007 -
and required borrowers to make ten years of qualifying payments - the first Trump Administration was the first to be able to approve applications under the program. The Biden Administration made policy changes that allowed borrowers to receive credit
for payments made under different payment plans and changed the rule that prohibited borrowers from receiving PSLF credit for payments made prior to consolidating their loans. As a result, more than one million public service workers had their student loans forgiven by January of 2025.
The EO will not go into effect until the US Department of Education (ED) has issued regulations, a process that is typically lengthy
and accomplished through negotiated rulemaking, or “neg reg” for short. Neg reg requires staff at
ED to develop a proposed regulation, post it in the Federal Register, and then work with representatives of the organizations that will be affected to come to agreement on the final regulations.
Many college access and success programs rely on PSLF to attract and retain talented employees. The National College Attainment Network (NCAN) will follow this sweeping and illegal move closely and fiercely advocate against its implementation.
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