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The rule, which was published Friday in the Federal Register, grants Education Secretary Linda McMahon unilateral authority to determine which organizations are ineligible for the program. It takes effect July 1, 2026.
According to critics, the rule could disqualify employees of sanctuary jurisdictions and nonprofit organizations that provide immigrant family support, gender-affirming care, diversity and equity programs, or assistance to protesters exercising First Amendment rights.
The Public Service Loan Forgiveness program was established by Congress in 2007 on a bipartisan basis. Under the program, federal, state, local and tribal government employees, as well as workers for 501(c)(3) nonprofit organizations, can have their remaining federal student loan debt forgiven after making 10 years of qualifying payments while working in public service. More than one million workers have received loan forgiveness through the program to date.
Two advocacy organizations, Democracy Forward and Protect Borrowers, issued a joint statement committing to challenge the rule in federal court.
"This is a direct and unlawful attack on nurses, teachers, first responders, and public service workers across the country," the organizations said. "This new rule is a craven attempt to usurp the legislature's authority in an unconstitutional power grab aimed at punishing people with political views different than the administration's."
Alexander Lundrigan, Higher Education Policy and Advocacy Manager at Young Invincibles, called the changes "illegal" and "politically motivated."
