*Madeline Stewart
I. Changes to PSLF and Subsequent Lawsuits
On November 3, 2025, two complaints were filed against the U.S. Department of Education and Linda McMahon, the Secretary of the Department of Education[1], following the Department of Education’s announcement of a rule change to the Public Service Loan Forgiveness program (PSLF) on October 31.[2] The new regulation, going into effect on July 1, 2026, has added provisions to “exclude employers that engage in specific enumerated illegal activities such that have a substantial illegal purpose” from the program to avoid the cost of subsidizing “employees of organizations that undermine national security and American values through criminal activity.”[3] The plaintiffs, including twenty-one states and the District of Columbia, nine nonprofits, and five cities and counties, allege that the new regulation targets organizations and governments whose policies conflict with the Trump Administration’s positions on “immigration, race, gender, free speech, and public protest[.]” [4]
Beginning July 1, 2026, payments made by student loan borrowers who are employed by organizations the Secretary of Education determines are “engaged in illegal activity” will not qualify for PSLF credit.[5] An additional amendment states that a student loan borrower cannot request reconsideration of the Secretary’s decision after the Secretary has determined that an employer has a substantial illegal purpose.[6] If an employer is found to have a substantial illegal purpose, the employer will be ineligible to participate in PSLF unless “the Secretary approves a corrective action plan[,]” or ten years have passed from the Secretary’s determination.[7]
II. History of PSLF
PSLF was created under Title IV of the College Cost Reduction and Access Act of 2007, which cancels the remaining loan balance owed by student loan borrowers who have made 120 payments to their student loan balance after October 1, 2007, while employed in public service jobs.[8] These public service jobs include roles in government, teaching, nursing, policing, 501(c)(3) non-profits, and public interest law.[9]
The first batch of borrowers applying for loan forgiveness after 120 payments, or ten years of monthly payments, became eligible in 2017, during the first Trump Administration.[10] The program’s complex eligibility requirements were difficult to interpret, and the company hired to manage the program was not provided with an instructional manual, hindering its ability to provide clarification.[11] “[B]orrower[s] who [we]re. . . ‘confused’ by the program’s requirement[s could not get answers on] whether their employment [wa]s eligible,” and the system in place made “errors in [count]ing [the amount of loan] payments,” with the responsibility falling “on. . . borrowers to catch. . . mistakes.”[12] As a result of these issues, only ninety-six out of the 28,000 borrowers who submitted applications between October 2017 and September 2018 were approved for loan forgiveness.[13]
In 2019, the American Bar Association (ABA) and four individual plaintiffs employed in public interest law sued the Department of Education over the denial of PSLF to ABA and to public interest lawyers working for certain non-profit classifications.[14] Three of the individual plaintiffs were successful in arguing that the changes the Department of Education had made to PSLF, which rendered them ineligible for loan forgiveness, violated the Administrative Procedure Act.[15]By October 2024, over a million borrowers had more than $70 billion in student debt forgiven through the program. [16]
III. Plaintiffs’ Concerns in the November 2025 Complaints
Both complaints filed against the Department of Education in November 2025 raised concerns that, without PSLF, high student loan debt will prevent top talent from pursuing nonprofit and government careers, opting to work for higher-paying private corporations instead.[17] The plaintiffs are also concerned that “illegal” activities will include activities that, while legal, do not align with the Trump Administration’s policy agendas, and that the illegal purposes outlined in the rule are pretextual and target “support for immigrants, gender affirming care, diversity, equity and inclusion initiatives, and political protest.”[18] This rule would allow the Secretary of Education to single-handedly select which employers have engaged in a “substantial illegal purpose,” a term that is overbroad and vague.[19]
IV. Conclusion
If these changes to PSLF take effect, current and future students may be hesitant to pursue career paths that incur high student debt for modestly paying jobs, such as government and non-profit work.[20] Those who can work elsewhere for higher pay to manage student debt may do so, effectively gutting organizations that have relied on PSLF to entice new hires.[21] Furthermore, current and prospective students may be disincentivized from pursuing careers in causes that they believe in if their beliefs do not align with an Administration’s agenda.[22]
*Madeline Stewart is a second-year student at the University of Baltimore School of Law and a Staff Editor for Volume 55 of Law Review. Madeline is a member of the mock trial team and the Royal Graham Shannonhouse III Honor Society. Prior to law school, she attended Towson University, majoring in Journalism and Women’s Studies. This summer, she will join Semmes, Bowen & Semmes as a Summer Associate.
[1] Complaint, Massachusetts v. U.S. Dep’t of Educ., No. 1:25-cv-13244 (D. Mass. Nov. 3, 2025) [hereinafter No. 1:25-cv-13244 Complaint]; Complaint, Nat’l Council of Nonprofits v. McMahon, No. 1:25-cv-13242 (D. Mass. Nov. 3, 2025).
[2] William D. Ford Federal Direct Loan Program, 90 Fed. Reg. 48966 (Oct. 31, 2025) (to be codified at 34 C.F.R. pt. 685).
[3] William D. Ford Federal Direct Loan Program, 90 Fed. Reg. at 48966.
[4] No. 1:25-cv-13244 Complaint, supra note 1, at 2, 19;Nat’l Council of Nonprofits Complaint, supra note 1, at 2–3, 30–31.
[5] William D. Ford Federal Direct Loan Program, 90 Fed. Reg. at 48966.
[6] Id.
[7] Id. at 48966–67.
[8] College Cost Reduction and Access Act § 401, 20 U.S.C. § 1087e(m) (requiring eligible borrowers to have made 120 payments, to be employed in a public service job during the 120 payments, and to be employed in a public service job at the time of loan forgiveness).
[9] See Qualifying Public Services for the Public Service Loan Forgiveness (PSLF) Program,Fed. Student Aid, https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service/qualifying-public-services (last visited Jan. 28, 2026).
[10] Stacy Cowley, 28,000 Public Servants Sought Student Loan Forgiveness. 96 Got It., N.Y. Times (Sep. 27, 2018), https://www.nytimes.com/2018/09/27/business/student-loan-forgiveness.html.
[11] Id.
[12] Id.
[13] Id.
[14] A.B.A. v. U.S. Dep’t of Educ., 370 F. Supp. 3d 1, 10, (D.D.C. 2019).
[15] Id. at 34; Qualifying Public Services for the Public Service Loan Forgiveness (PSLF) Program, supra note 9.
[16] Making Public Service Loan Forgiveness Work for Borrowers and the American People, The White House: Council of Economic Advisors (Oct. 17, 2024), https://bidenwhitehouse.archives.gov/cea/written-materials/2024/10/17/making-public-service-loan-forgiveness-work-for-borrowers-and-the-american-people/.
[17] No. 1:25-cv-13244 Complaint, supra note 1, at 8; Nat’l Council of Nonprofits Complaint, supra note 1, at 3.
[18] No. 1:25-cv-13244 Complaint, supra note 1, at 2; see Nat’l Council of Nonprofits Complaint, supra note 1, at 2–3.
[19] No. 1:25-cv-13244 Complaint, supra note 1, at 3; Nat’l Council of Nonprofits Complaint, supra note 1, at 3.
[20] See PSLF: A Crucial Tool for Recruiting and Retaining Legal Professionals, ABA (Aug. 26, 2025) https://www.americanbar.org/advocacy/governmental_legislative_work/priorities_policy/legaleducation/pslf-homepage/pslf-overview-and-purpose/ (“81% of surveyed public-interest attorneys aware of PSLF reported that the program’s promise significantly influenced their decision to take their current job, and over half said that they likely would not have taken the job at all if PSLF didn’t exist.”)
[21] See No. 1:25-cv-13244 Complaint, supra note 1, at 1; Nat’l Council of Nonprofits Complaint, supra note 1, at 3.
[22] See No. 1:25-cv-13244 Complaint, supra note 1, at 8, 19; Nat’l Council of Nonprofits Complaint, supra note 1, at 9, 30.
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