The Trump administration agreed Oct. 21 to dismiss two appeals seeking to revive restrictions on the Public Service Loan Forgiveness program, while a third appeal over the same rule remained pending, according to court filings.
The appeals challenged June 30 rulings by federal judges in Massachusetts and the District of Columbia, who struck down a Department of Education (DOE) rule that would have allowed the agency to disqualify from the program employers deemed to have a “substantial illegal purpose.”
The Department of Justice didn’t respond to an email seeking comment.
Congress created the Public Service Loan Forgiveness (PSLF) program in 2007 to encourage careers in public service. It forgives remaining federal direct loan balances for eligible borrowers who make 120 qualifying monthly payments while working full time for government agencies or qualifying nonprofit employers.
President Donald Trump signed Executive Order 14235 on March 7, 2025, directing the DOE to revise eligibility rules for the PSLF program.
The order sought to exclude employees of organizations whose activities have a “substantial illegal purpose.” It listed activities including aiding violations of federal immigration laws, supporting terrorism, trafficking children, engaging in illegal discrimination, and committing certain acts of public disorder.
The DOE published its implementing rule on Oct. 31, 2025, with a scheduled effective date of July 1, 2026.
It also targeted organizations involved in what the order described as “chemical and surgical castration or mutilation of children,” or helping children cross state lines for transgender medical procedures.
Three lawsuits challenged the DOE’s disqualification rule.
The National Council of Nonprofits, joined by cities, unions, and other nonprofit organizations, sued in federal court in Massachusetts.
The council said the DOE rule put in place restrictions Congress never authorized and sought to penalize organizations because their viewpoints were “at odds with the administration’s agenda.”
U.S. District Judge Myong J. Joun of the U.S. District Court for the District of Massachusetts struck down the rule on June 30 in challenges brought by the National Council of Nonprofits. Joun also struck down the rule in a separate lawsuit brought by Massachusetts and other states.
The DOE in its Oct. 21 decision agreed to dismiss its appeal in the case brought by the council.
“Nearly a year ago, we made the unequivocal decision to challenge this unlawful rule, and today that decision has been vindicated,” said Diane Yentel, president and CEO of the National Council of Nonprofits, in a statement on Thursday. “With the appeal dismissed, the court’s order vacating the rule stands, and PSLF remains as Congress designed it.”
The Robert F. Kennedy Center for Justice and Human Rights and other nonprofit organizations separately brought a lawsuit in federal court in Washington, similarly arguing that the DOE lacked authority to exclude otherwise qualifying nonprofit employers.
U.S. District Judge Amir H. Ali in Washington struck down the DOE rule on June 30 in that lawsuit, and the DOE on Oct. 21 agreed to dismiss its appeal.
