5 Things Student Loan Borrowers Should Know About Trump’s PSLF Executive Order

Last week, President Donald Trump signed an executive order limiting eligibility for the Public Service Loan Forgiveness (PSLF) program. The program offers student loan forgiveness in as little as 10 years for borrowers who work full-time for qualifying nonprofit or government employers and comply with other program rules.

Trump’s PSLF executive order, if enacted, could have significant impacts for borrowers pursuing student loan forgiveness under the program. But the order may not have an immediate effect, and advocacy groups are questioning its legality and threatening to bring legal challenges against the administration. 

Here’s where things stand, and what student loan borrowers should know.

PSLF provides student loan forgiveness for qualifying public service employment

The PSLF program was established in 2007 under President George W. Bush to incentivize working in underserved, underpaid fields in nonprofit and government organizations. Many roles in the public service field require advanced degrees (such as in education, medicine or law) but pay a fraction of what workers could earn in the private sector. PSLF allows borrowers to qualify for student loan forgiveness after 120 qualifying payments — the equivalent of 10 years of service.

However, problems plagued PSLF long after its inception. The program had complicated rules, and poor communication by the Department of Education and contracted loan servicers sometimes led borrowers astray, not realizing they had the “wrong” type of student loan or were in repayment under the “wrong” type of repayment plan.  Other borrowers who did everything right to comply with PSLF program rules were still denied relief because of poor recordkeeping by loan servicers, and inadequate oversight by the Department of Education. 

President Biden implemented several reforms, including temporary “waivers” of PSLF rules and new regulations, designed to address these historical problems. As a result, more people than ever before have qualified for student loan forgiveness under the program, with more than a million borrowers receiving a discharge through PSLF by the end of 2024.

How Trump’s PSLF executive order attempts to limit student loan forgiveness

President Trump’s executive order appears to be a direct response to the Biden administration’s efforts to make PSLF more accessible and to correct 

“The prior administration abused the PSLF Program through a waiver process, using taxpayer funds to pay off loans for employees still years away from the statutorily required number of payments,” reads the order issued last week.  Of course, no borrower could have received student loan forgiveness under the PSLF program without having at least 10 years of qualifying employment, and many borrowers received PSLF credit during the Covid forbearance period because Congress specifically authorized that period to count for PSLF-eligible borrowers, even though no payments were required.

In the order, President Trump indicates that certain qualifying organizations that engage in “illegal” activities should be excluded from PSLF eligibility. 

“It is the policy of my Administration that individuals employed by organizations whose activities have a substantial illegal purpose shall not be eligible for public service loan forgiveness,” says the order. The order then goes on to identify several categories of “activities that have a substantial illegal purpose” including organizations that are “aiding and abetting” violations of federal immigration laws, supporting “terrorism,” facilitating “child abuse” (which the order specifically references in the context of providing healthcare to transgender youth), “aiding and abetting illegal discrimination,” and “engaging in a pattern of violating State tort laws.”

Trump’s PSLF executive order limiting loan forgiveness may violate original PSLF statute

President Trump’s executive order limiting the PSLF program cannot be implemented immediately. Under the program's governing statute, a president does not have the authority to unilaterally change its operation. 

Instead, the order directs the Department of Education to revise the PSLF program regulations to enact the set of restrictions. As a practical matter, even if this happens, it will take a while. The rulemaking process for federal student loan programs is lengthy and complicated, requiring multiple public hearings, periods of public comment, rounds of publication and waiting periods. The process will take at least a year, and possibly two — and it hasn’t even begun yet.

But such wholesale changes to PSLF regulations may be illegal, even if the Department of Education follows each required procedural step perfectly. That’s because the statute governing PSLF does not give the president or the Department of Education discretion to limit PSLF eligibility, particularly for 501(c)(3) nonprofit organizations or government entities, based on an organization’s activities. 

What the PSLF statute says

The governing PSLF statute defines a “public service job” as “a full-time job in emergency management, government (excluding time served as a member of Congress), military service, public safety, law enforcement, public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations, as such terms are defined by the Bureau of Labor Statistics), public education, social work in a public child or family service agency, public interest law services (including prosecution or public defense or legal advocacy on behalf of low-income communities at a nonprofit organization), early childhood education (including licensed or regulated childcare, Head Start, and State funded prekindergarten), public service for individuals with disabilities, public service for the elderly, public library sciences, school-based library sciences and other school-based services, or at an organization that is described in section 501(c)(3) of title 26 and exempt from taxation under section 501(a) of such title; or teaching as a full-time faculty member at a Tribal College or University as defined in section 1059c(b) of this title and other faculty teaching in high-needs subject areas or areas of shortage (including nurse faculty, foreign language faculty, and part-time faculty at community colleges), as determined by the Secretary.”

The only area of discretion in the statute is in the last clause, where the Secretary of Education can determine “high needs subject areas or areas of shortage” for specific teaching positions. 

Trump’s PSLF order limiting student loan forgiveness may also violate the constitution

In addition, the wording of President Trump’s executive order is so broad that, if incorporated fully into new PSLF regulations, could easily be read to allow for sweeping restrictions on PSLF eligibility that may amount to constitutional violations, such as freedom of speech and association. Restricting PSLF eligibility to organizations that are “aiding and abetting illegal discrimination,” for example, could allow the administration to bar any nonprofit organization, or state or local government entity or civil rights group, that promotes DEI or racial justice, for instance; the immigration prong could be used to block any organization that assists immigrants in any way; and the “child abuse” prong could be weaponized against any LGBTQ advocacy organization. 

“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,” said Aaron Ament, president of the National Student Legal Defense Network, in a statement. “If the Trump Administration follows through on this threat, they can plan to see us in court.”

“President Trump's executive order raises serious concerns, as it may interfere with First Amendment freedoms by targeting organizations based on their work,” said Nadine Chabrier, senior policy counsel at the Center for Responsible Lending, in a statement this week. “Moreover, by penalizing individuals seeking loan forgiveness for their associations and the expressive conduct of their employers, new rulemakings could infringe on fundamental rights to speech and association.”

“Don’t be fooled, today’s executive order is blatantly illegal and an all-out weaponization of debt intended to silence speech that does not align with President Trump’s MAGA agenda,” said Mike Pierce, Executive Director of the Student Borrower Protection Center. “It is an attack on working families everywhere and will have a chilling effect on our public service workforce doing the work every day to support our local communities.”

Congress could impose its own PSLF restrictions to limit student loan forgiveness

Separately, Republican lawmakers in Congress are also looking at potentially changing PSLF eligibility rules, among other major changes to federal student loan forgiveness and repayment programs. The House Budget Committee drafted a memo earlier this year outlining possible changes to various programs, including PSLF.

“Reform Public Service Loan Forgiveness (PSLF),” reads one of the items listed in the memo. “This option would allow the Committee on Education and the Workforce to make much-needed reforms to the PSLF, including limiting eligibility for the program.” The memo provides no specifics, however.

Historically, when Congress has made changes to federal student loan programs, the changes apply to new loans taken out around or after the enactment of the changes, essentially grandfathering in current borrowers. It’s unclear, however, if Congress intends to do the same for any PSLF reforms currently under consideration.