President Donald Trump has issued an executive order that limits who can apply for Public Service Loan Forgiveness (PSLF) less than two weeks after the Department of Education paused all income-driven repayment plans.
Created in 2007 by the Bush administration, the PSLF program aimed to streamline loan forgiveness for borrowers working in public service or qualifying nonprofit organizations after making 10 years of payments.
However, President Trump’s executive order accuses previous leadership of using taxpayer funds to pay off accounts that were still years away from the minimal amount of payments needed for forgiveness. The Biden administration forgave the loans of over one million borrowers—totaling $78.46 billion—through the PSLF program, according to a White House fact sheet. The program had previously only assisted 7,000 borrowers.
“Moreover, instead of alleviating worker shortages in necessary occupations, the PSLF Program has misdirected tax dollars into activist organizations that not only fail to serve the public interest, but actually harm our national security and American values, sometimes through criminal means,” the order reads.
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Nonprofits excluded from the PSLF program include those that participate in “illegal” or “harmful” activities. Such nonprofits include those that:
- violate federal immigration laws
- support terrorism
- involve child abuse, “including the chemical and surgical castration or mutilation of children or the trafficking of children to so-called transgender sanctuary States for purposes of emancipation from their lawful parents, in violation of applicable law”
- aid and abet illegal discrimination
- engage in a pattern of trespassing, cause disorderly conduct or vandalism, create a public nuisance and obstruct highways
The order comes after Secretary of Education Linda McMahon said she would defend the program from unlawful attacks against it in her Senate confirmation hearing in February.
Some experts believe this executive order is “redefining the law,” which makes it ripe for legal challenge. “These borrowers have signed contracts [with the Department of Education] that embed this right to public service loan forgiveness in it, ” Persis Yu, deputy executive director and managing counsel at the Student Borrower Protection Center, told NPR.
The PSLF program suffered intense scrutiny during Trump’s first term. A 2018 review by the Government Accountability Office found the Department of Education had not communicated with the company handling PSLF loans as to which jobs qualify. That same year, NPR found that 99% of applications for loan forgiveness through PSLF were denied.
