Two federal judges on Tuesday struck down the Trump administration’s restrictions on Public Service Loan Forgiveness, blocking a rule that would have barred thousands of nonprofit and government workers from the student debt relief program set to take effect Wednesday.
U.S. District Judge Myong J. Joun in Massachusetts ruled that the administration’s revised eligibility requirements were “arbitrary and capricious” and violated the First Amendment, according to The Washington Post. The rule would have allowed the Education Department to exclude employers deemed to have a “substantial illegal purpose,” a definition the Trump administration crafted to cover organizations aiding immigration, supporting transgender healthcare, and engaging in other activities the administration opposes.
The Public Service Loan Forgiveness program forgives federal student loans after 10 years of service and 120 monthly payments for government and nonprofit employees. More than a million borrowers have received debt relief since Congress established the program in 2007, according to The Guardian.
President Trump signed an executive order in March 2025 directing the Education Department to revise PSLF regulations to exclude organizations with “substantial illegal purpose.” The Education Department finalized the rule in October 2025, defining that term to include aiding what it called illegal immigration, supporting terrorism, engaging in illegal discrimination, and providing gender-affirming medical care for transgender minors. Judge Joun found the rule threatened to revoke PSLF eligibility from borrowers who lawfully assist immigrants and other protected groups, according to Reuters.
Democratic-led states, cities, nonprofits, and unions filed suit in November 2025 to block the rule before its July 1 effective date, arguing the Education Department lacked authority to create new exceptions to eligibility and that the policy targeted causes the administration disfavors. Judge Joun sided with the plaintiffs, vacating the rule nationwide just hours before it was scheduled to take effect.
The ruling marked the second legal defeat for the Trump administration’s student loan overhaul in less than a week. On June 26, another federal judge in Washington, D.C. blocked a separate Trump rule that would have imposed lower federal student loan limits for people pursuing graduate degrees in nursing and other healthcare-related fields, The Guardian reported.
Sources
- The Washington Post — Two federal judges’ decision to strike down Trump’s PSLF restrictions, Judge Joun’s ruling on arbitrary and capricious standard.
- The Guardian — Details on the rule’s definition of “substantial illegal purpose,” borrower statistics, and the second judicial ruling on graduate loan limits.
- Reuters — Judge Joun’s finding that the rule threatened to revoke PSLF eligibility from borrowers assisting immigrants.
- NPR — Background on the Trump administration’s March 2025 executive order and the rule’s effective date.
