U.S. Education Department Issues Final Rule On Loan Forgiveness, Cutting Off Illegal Groups
The U.S. Department of Education today announced a final rule aimed at restoring the integrity and original purpose of the Public Service Loan Forgiveness (PSLF) program, explicitly moving to protect American taxpayers.
The new regulation amends the definition of “qualifying employer” to exclude organizations with a “substantial illegal purpose,” effectively cutting off federal benefits for groups involved in activities like supporting terrorism or aiding and abetting illegal immigration.
This move by the Trump Administration targets what officials call an oversight in monitoring, which has allowed certain organizations engaging in illegal or harmful activities to qualify as public service employers since the program’s inception by Congress in 2007.
“Taxpayer funds should never directly or indirectly subsidize illegal activity,” stated Under Secretary of Education Nicholas Kent. He emphasized that the program was designed to support dedicated public servants like teachers, first responders, and civil servants, not to subsidize organizations that “violate the law, whether by harboring illegal immigrants or performing prohibited medical procedures that attempt to transition children away from their biological sex.”
Rightsizing Public Service
The PSLF program was established to encourage Americans to pursue public service careers by promising to forgive their federal student loans after 10 years of qualifying employment and payments.
However, the new rule, which stems from President Trump’s Executive Order 14235, Restoring Public Service Loan Forgiveness, on March 7, 2025, ensures that taxpayer-funded loan forgiveness benefits will now only be available to borrowers employed by organizations that genuinely serve the public good and abide by the law.
Following a public comment period that drew nearly 14,000 responses and a negotiated rulemaking process with stakeholders, the final rule will officially go into effect on July 1, 2026.
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