The Trump administration has halted efforts to overhaul the Public Service Loan Forgiveness program, ending a plan that could have prevented some American workers from using the popular loan program.
In a filing Wednesday, the Trump administration announced it was dropping its appeal of a June 30 federal court ruling finding the overhaul illegal, without providing an explanation for its decision. Advocates for student borrowers welcomed the move. Dan Zibel, chief attorney for the advocacy group Student Borrowers, called it “a significant victory for millions of Americans who have dedicated their careers to public service.”
Proposed changes to the rules of the Federal Public Service Loan Forgiveness (PLSF) program, originally proposed in August 2025, would have prohibited individuals from participating if their employer engaged in certain illegal activities. The proposed overhaul stipulates that employees who work for organizations that support terrorism, violate immigration laws or are involved in what the rule describes as “chemical and surgical castration or mutilation of children.” would be prohibited.
The Department of Education did not immediately respond to a request for comment.
Here’s what you need to know about the change.
What is the Public Service Loan Forgiveness Program?
The PLSF is for people who work for government agencies, public schools, fire and police departments, public hospitals, and nonprofit organizations. The idea is to provide a path to student loan forgiveness for people who work in public service. The program forgives outstanding debt for eligible borrowers who make 120 monthly payments, or 10 years of participation.
Nearly 720,000 federal student loans were paid off through the program between 2018 and mid-2025, according to the Education Data Initiative, which collects data on the U.S. education system.
What did the Trump administration want to change?
At the time the Trump administration announced the new rule, Department of Education Deputy Secretary of Education Nicholas Kent said the rationale for overhauling the PLSF was to “support public servants who strengthen their communities and serve the public good, not corporations engaged in illegal activities that harm Americans.”
The rule was intended to disqualify applicants from the program if their employer engaged in “a significant illegal purpose.” It included a list of activities such as violating immigration laws, terrorism, trafficking, violating state laws, or “violence with the intent to obstruct or influence the policy of the federal government.”
The rule was finalized in October 2025.
Who challenged the redesign?
The rule has been challenged in court by several nonprofit organizations and municipalities, including Public Citizen Litigation Group and Student Defense on behalf of the Robert & Ethel Kennedy Human Rights Center, the American Immigration Council, and cities including Albuquerque, New Mexico, Boston, and Chicago.
The groups argued that the rule gave the Department of Education excessive latitude to decide whether an organization was engaged in “a significant illegal purpose.”
Just before it took effect in July, U.S. District Judge Myong Joun of Massachusetts struck down the rule, saying it exceeded the Education Department’s authority and threatened to violate the First Amendment’s free speech protections. The same day, District Judge Amir Ali of Washington issued a similar ruling in a case brought by nonprofit organizations.
Nonprofit leaders said Thursday that the administration’s decision to drop the appeal would bring relief to many public employees.
“With the appeal denied, the court order striking down the rule stands and the PLSF remains as Congress intended it,” Diane Yentel, CEO of the National Council of Nonprofits, said in a statement.
She added, “This outcome gives nonprofit employees confidence that the loan relief they earned during their years of public service will be there for them, so they can continue to do the work that strengthens the communities they serve.” »
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