Judge Blocks ED’s Rule Limiting PSLF Beneficiaries

Less than 24 hours before the government’s rule to limit access to Public Service Loan Forgiveness was to take effect, a district court judge ruled it unlawful.  

In a ruling on Tuesday, Judge Myong J. Joun of the U.S. District Court of Massachusetts said the Trump administration’s plans to limit the loan forgiveness program are “arbitrary and capricious and [violate] the First Amendment.”

In March of last year, President Trump issued an executive order to exclude employees of public organizations that conduct “illegal activities” from the PSLF program. In its final rule implementing the order, the Department of Education said those activities include aiding and abetting violations of immigration or civil rights law, supporting terrorism, providing gender-affirming care, or “trafficking” children from one state to another for purposes of emancipation.

Borrowers who work for employers found to have “a substantial illegal purpose,” under the rule, will no longer qualify for PSLF, and any payments made while working there won’t count toward loan forgiveness. (Qualifying borrowers can get their loans forgiven after making payments for 10 years and working for an eligible employer.)

In November, 22 states, the District of Columbia, five cities and counties, five nonprofit employers, and five employee associations challenged the lawfulness of the department’s new rule and argued that the threat of disqualification could deter people from entering public service. More than a hundred amici supported the plaintiffs. “Zero amici appeared in support of the defendants,” the judge noted.

In his ruling, Joun said the department’s final rule chills protected speech and attempts to force PSLF beneficiaries to adopt the administration’s policy views. 

The final rule effectively restricts the expression of others “by threatening to revoke PSLF eligibility from borrowers who, among other things, lawfully assist immigrants; teach diversity, equity, and inclusion practices; and facilitate gender-affirming care,” he wrote.

“Although the department contends that the Final Rule does not target lawful activity, the text of the rule itself does not support that assertion.”

A separate district judge also ruled Thursday against the administration's rule in a challenge brought by four non-profits whose employees rely on the program's loan forgiveness. In his opinion, Judge Amir H. Ali for the U.S. District Court for the District of Columbia said that Education Department's rule limiting PSLF based on its categorization of activities exceeds the secretary's authority under the Higher Education Act.