The Trump administration on Wednesday dropped two legal appeals that sought to overhaul the Public Service Loan Forgiveness (PSLF) program. The decision, filed in court via single-sentence joint agreements, ends a federal effort to disqualify employees of certain organizations from receiving student debt cancellation. The Department of Justice and the Department of Education did not provide an immediate explanation for the move.
The Public Service Loan Forgiveness program cancels outstanding federal student debt for eligible borrowers who work for government agencies, public schools, emergency services, or nonprofits for 10 years while making 120 monthly payments. In August 2025, the administration proposed rules to disqualify organizations deemed to have a "substantial illegal purpose." These changes were finalized in October 2025 but were challenged by more than 20 states, several cities, and nonprofit advocacy groups.
The proposed regulations would have barred employees from the program if their employers engaged in activities including terrorism, violating immigration laws, trafficking, or what the rule described as the "chemical and surgical castration or mutilation of children." Critics of the rule argued the phrasing was vague and intended to target organizations supporting undocumented immigrants or transgender youth. In June 2026, two federal judges, Myong Joun in Massachusetts and Amir Ali in Washington, vacated the rule, finding that the Department of Education had overstepped its authority and risked violating First Amendment speech protections.
The scale of this action preserves a pathway to debt relief for workers who would have potentially lost eligibility under the new definitions of qualifying service. For individual households, this means their long-term financial planning for debt discharge remains intact according to the original 2007 congressional design of the program. Organizations such as the American Immigration Council and the Robert & Ethel Kennedy Human Rights Center, which were among the challengers, will continue to be recognized as eligible employers for their staff.
With the dismissal of these appeals, the June 30 court orders vacating the rule stand as the final legal word on the matter. The program continues under its existing regulations, and eligible borrowers may continue accruing credit toward the required 10 years of service. No further court dates or implementation deadlines regarding these specific rule changes are currently scheduled following the Wednesday filing.