Two federal judges on Tuesday blocked the Trump administration’s new student loan ruling that would have stripped public service workers of eligibility for federal loan forgiveness if their employers were deemed to have a “substantial illegal purpose.” U.S. District Judge Myong Joun in Boston and U.S. District Judge Amir Ali in Washington, D.C., struck down the rule one day before it was scheduled to take effect on July 1, 2026.
The Public Service Loan Forgiveness program allows borrowers to have their federal student loans forgiven after 10 years of full-time work for government or nonprofit employers. More than 1 million borrowers have received debt relief since Congress established the program in 2007.
Judge Joun sided with Democratic-led states, cities, and nonprofits that argued the Department of Education’s rule would allow the administration to target groups supporting immigration rights, transgender healthcare, and other causes the Trump administration disfavors by disqualifying them from the program. The Education Department’s final rule, published in October 2025, defined “substantial illegal purpose” as covering activities including aiding illegal immigration, supporting terrorism, engaging in illegal discrimination, and participating in what it termed the “chemical and surgical castration or mutilation of children.”
In his ruling, Joun found the rule “unlawful,” “arbitrary and capricious,” and in violation of the First Amendment. He wrote that the Education Department attempted to redefine what constitutes “public service” work without legal authority to do so, based on policy objectives Congress never identified as relevant for eligibility. “Indeed, the record further demonstrates that the Final Rule has already chilled protected speech,” Joun wrote.
Trump issued an executive order in March 2025 directing the Education Department to narrow PSLF eligibility and exclude employers engaged in activities with a “substantial illegal purpose.” The administration argued the program had been exploited by activist organizations that harm U.S. national security and values. Under Secretary of Education Nicholas Kent said in a statement that the Education Department is evaluating next steps and stands behind the rule as “commonsense policy.”
New York Attorney General Letitia James, a Democrat who led 22 states and the District of Columbia in the legal challenge, said the ruling “stopped the federal government from turning a program created to honor public service into a weapon for political retaliation.” “Public servants should not have to pass a political loyalty test to earn the loan forgiveness they were promised,” she said.
Winston Berkman-Breen, legal director at advocacy group Protect Borrowers, called the decision significant for working people across the country. “With today’s decision, teachers, social workers, immigration attorneys, and government employees can continue their important work without fear that the federal government will punish them for their service,” Berkman-Breen said in a statement.
Judge Joun also applied a newer Supreme Court framework for reviewing agency regulations, noting that the law granted general authority to administer the program but did not specifically authorize the department to add an employer-disqualification test based on the administration’s policy preferences.
Sources
- Reuters — Details of the court ruling by Judge Myong Joun, the program’s 10-year forgiveness structure, the 1 million borrowers served since 2007, and the judges’ rationale.
- Business Insider — Information on Judge Joun’s decision, the rule’s July 1 effective date, the March 2025 executive order, and statements from Protect Borrowers legal director.
- Yahoo News — Judge Amir Ali’s parallel ruling, the department’s definition of “substantial illegal purpose,” Judge Joun’s First Amendment analysis, and the Supreme Court framework applied.
