Two federal judges in the United States have blocked the Trump administration from enforcing a controversial regulation that would have denied student loan forgiveness to public service workers employed by organizations deemed to have a “substantial illegal purpose.”
The rulings, issued just before the policy was scheduled to take effect, prevent the Department of Education from narrowing eligibility under the Public Service Loan Forgiveness (PSLF) program, which erases federal student loan debt for eligible borrowers after 10 years of qualifying public service.
In Boston, U.S. District Judge Myong Joun ruled in favor of a coalition of Democratic-led states, municipalities and nonprofit organizations that challenged the regulation. They argued the rule granted the federal government sweeping authority to disqualify organizations involved in causes such as immigrant rights, transgender healthcare and diversity initiatives based on political disagreement.
Shortly afterward, U.S. District Judge Amir Ali in Washington, D.C., reached a similar conclusion in a separate lawsuit brought by four nonprofit organizations, including groups advocating for immigrant communities. His decision also prevented the rule from taking effect.
Created by Congress in 2007, the PSLF program was designed to encourage graduates burdened with student debt to pursue careers in government agencies and nonprofit organizations. More than one million borrowers have already benefited from the initiative.
The Trump administration had maintained that the program was being exploited by activist organizations whose activities conflicted with national interests. An executive order issued in March 2025 directed the Education Department to tighten the program’s eligibility standards.
Judge Joun, however, found that Congress had never authorized the Education Department to redefine what qualifies as public service based on ideological or policy considerations. He concluded that the department was attempting to exclude employers—and by extension, their employees—from the program without legal authority.
The judge also held that the regulation likely violated the First Amendment, finding it discriminated against organizations because of the viewpoints they expressed or the services they provided. According to the ruling, evidence presented during the case showed that the regulation had already discouraged constitutionally protected speech among affected organizations.
The challenged regulation, finalized in October, expanded the definition of a “substantial illegal purpose” to include activities such as assisting illegal immigration, supporting terrorism, engaging in unlawful discrimination, and providing gender-affirming medical care for minors. Opponents argued the language was crafted to single out organizations whose missions conflicted with the administration’s political priorities.
The lawsuits, filed in November, contended that the rule effectively punished workers employed by organizations engaged in lawful advocacy and public service simply because of the government’s disagreement with their work.
Following the rulings, the Department of Education said it was reviewing its legal options. The department defended the policy, arguing that the loan forgiveness program should benefit those serving the public interest rather than organizations it believes engage in unlawful or harmful activities.
New York Attorney General Letitia James, who helped lead the multistate legal challenge, welcomed the decision, saying the courts had prevented the government from transforming a public service incentive into a tool for political retaliation. She added that public servants should not have to meet ideological standards to receive loan forgiveness promised under federal law.
The twin decisions temporarily preserve existing eligibility rules for the Public Service Loan Forgiveness program while the legal challenges continue through the courts.
