Follow Beinsure
- The US Justice Department withdrew appeals against two federal court rulings that blocked new restrictions on the Public Service Loan Forgiveness (PSLF) program.
- The proposed regulations would have allowed the Education Department to exclude government and nonprofit employers deemed to have a “substantial illegal purpose”.
- More than 2.3 mn borrowers are pursuing PSLF, which provides federal student loan forgiveness after 10 years of qualifying public service and 120 monthly payments.
The US Justice Department has withdrawn two appeals seeking to reinstate restrictions on the Public Service Loan Forgiveness (PSLF) program, leaving existing eligibility requirements intact for millions of federal student loan borrowers working in government and nonprofit organisations.
The decision, announced on October 21, 2026, ends the administration’s challenges to two federal court rulings issued in June that invalidated revised eligibility regulations introduced under President Donald Trump.
PSLF allows eligible government and nonprofit employees to have their remaining federal student loan debt forgiven after completing 10 years of qualifying public service and making 120 monthly loan payments.
More than 2.3 mn borrowers are pursuing forgiveness under the programme, according to US Education Department data.
Courts blocked proposed restrictions on public service loan forgiveness
The legal dispute concerned regulations developed following an executive order signed by Trump in 2025.
The proposed changes would have given Education Secretary Linda McMahon authority to disqualify employers from participating in PSLF if the department determined that their activities had a “substantial illegal purpose”.
Potential grounds for exclusion included assisting undocumented immigrants, providing gender transition care to minors and engaging in certain diversity, equity and inclusion activities.
The restrictions targeted employer eligibility rather than individual borrowers directly. Employees working for disqualified organisations could nevertheless have lost access to loan forgiveness based on their employer’s activities.
A coalition of nonprofit organisations, state and municipal governments, and labour groups challenged the regulations in federal court, arguing against the administration’s expanded authority to determine which employers qualified.
Two federal court decisions in June struck down the revised requirements. The Justice Department subsequently appealed both rulings before withdrawing those challenges in October.
Existing PSLF eligibility rules remain in effect
The withdrawal means the administration’s proposed employer restrictions remain blocked, preserving the existing framework for determining eligibility under the nearly two-decade-old bipartisan programme.
Advocacy organisations representing student borrowers welcomed the decision, describing it as a significant outcome for employees who have pursued careers in public service while making qualifying loan payments.
This is a significant victory for millions of Americans who have dedicated their careers to public service. The Trump administration’s attempt to weaponize public service loan forgiveness against organizations it disagrees with was anti-democratic and unlawful from the start.
Daniel Zibel, chief counsel at Student Defense
The outcome preserves the current employer eligibility requirements rather than introducing the administration’s proposed restrictions based on organisational activities.
For borrowers pursuing PSLF, the programme’s existing requirements of qualifying public service employment and 120 monthly loan payments remain unchanged by the abandoned appeals.
