Two federal judges blocked the Trump administration from implementing restrictions on student loan forgiveness for public service workers, dealing a legal setback to the administration’s effort to reshape the program. The judges, ruling on June 30 and July 1, 2026, struck down a new rule that would have barred workers from the Public Service Loan Forgiveness program if their employers were deemed to have a “substantial illegal purpose.”
U.S. District Judge Myong Joun in Massachusetts and U.S. District Judge Amir Ali in Washington, D.C., both appointed by former President Joe Biden, issued separate rulings blocking the rule before it was set to take effect on July 1. The decisions came just hours before the restrictions would have gone into effect.
The Trump administration had sought to add new eligibility rules to the PSLF program as part of its targeted overhaul of government programs. In a March 2025 executive order, President Trump directed the Education Department to narrow the program and exclude organizations he argued were exploiting it. The Education Department finalized the rule in October 2025, defining “substantial illegal purpose” to include aiding illegal immigration, supporting terrorism, and facilitating what the rule described as “chemical and surgical castration or mutilation of children.”
More than 20 states, along with a coalition of nonprofit groups, challenged the rule in lawsuits, arguing it would allow the Department of Education to target organizations that support causes considered disfavorable to the administration, including transgender healthcare and immigration advocacy. Four nonprofits involved in immigrant rights advocacy brought a separate challenge that led to Judge Ali’s ruling.
In his decision, Judge Joun found the agency lacked legal authority to create the restrictions and said the rule violated the First Amendment by discriminating on the basis of viewpoint. “The Department cannot create new criminal prohibitions through rulemaking,” Joun wrote. “Indeed, the record further demonstrates that the Final Rule has already chilled protected speech.”
The Trump administration has maintained the program was being misused. Under Secretary of Education Nicholas Kent said in a statement that the agency is evaluating next steps for its “commonsense policy.” “The Public Service Loan Forgiveness Program is intended to support Americans who serve the public good, not to subsidize organizations that engage in terrorism, facilitate illegal immigration, or support the mutilation of children,” Kent said.
Congress established the PSLF in 2007 to encourage college graduates to pursue careers in public service by forgiving their federal student loans after 10 years of qualifying employment. The program requires borrowers to make 120 qualifying monthly payments while working full-time for a government or nonprofit employer. More than 1 million Americans have had their loans canceled as a result of the program since its creation.
The rulings mark another legal setback for the Trump administration as it attempts to reshape federal student loan policy. The decisions leave the existing PSLF program intact and prevent the new eligibility restrictions from taking effect.
Sources
- The Hill — Reported that two federal judges blocked Trump administration restrictions on PSLF on July 1, 2026, with details on the judges’ reasoning and statements from the Education Department.
- Reuters — Provided details on the two judges’ decisions, the March 2025 executive order, the October 2025 final rule, the definition of “substantial illegal purpose,” and statements from state officials and the Education Department.
