Judges toss Trump’s loan forgiveness rule
Two federal judges struck down an Education Department rule that intended to narrow eligibility for a major student loan forgiveness program for people working in the public sector.
The department’s rule finalized last October stated that employers that have “substantial illegal purpose” would not be eligible for the Public Service Loan Forgiveness program. This includes supporting terrorism and trafficking children to emancipate them from their parents, among other things.
But Judge Myong Joun of the U.S. District Court for the District of Massachusetts wrote that the rule is unlawful, “arbitrary and capricious, and violates the First Amendment.”
And Judge Amir H. Ali of the U.S. District Court for the District of Columbia also struck down the rule on Tuesday.
The judges’ rulings came just one day before the rule was scheduled to take effect.
The court decisions are a blow to a policy goal President Donald Trump set out on early in his second term when he issued a March 2025 executive order as part of his efforts to reshape higher education.
The National Council of Nonprofits and other organizations sued the Trump administration in the Massachusetts court in November, alleging the new rule would break their talent pipeline. The Robert F. Kennedy Center for Justice and Human Rights and other groups filed a similar lawsuit at that time in the District of Columbia court.
Critics of the rule have said its definitions are broad and were designed to punish those whose work isn’t aligned with the administration’s priorities. Joun appeared to agree with these arguments, citing an executive order targeting sanctuary cities that protect immigrants’ rights and the administration’s public criticism of immigration attorneys.
“Even beyond immigration, the Administration has threatened legal action against generally lawful activity with which it disagrees,” Joun wrote.
Joun also said he was compelled to analyze the case using a framework established by the Supreme Court when it overturned the 40-year-old Chevron deference doctrine in 2024. The newer framework requires judges to decide the specific meaning of an agency’s authorizing statutes themselves rather than deferring to the agency when its interpretations are reasonable.
In this case, the law granted general authority to administer the program but did not specifically authorize the department to add an employer-disqualification test, Joun said.
Education Undersecretary Nicholas Kent said the department stands behind the rule it put out.
“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 in a statement. “The Department stands behind this commonsense policy to ensure that taxpayer dollars are never used to subsidize illegal activities and is evaluating next steps.”
Winston Berkman-Breen, legal director for Protect Borrowers and counsel for one set of plaintiffs, called the rule a clear overreach.
“This was a simple but powerful case with serious implications for working people across the country,” Berkman-Breen said in statement. “Today the Court recognized the Department’s unlawful attempt to empower the Trump Administration to target political opposition at the expense of borrowers and public service.”