President Trump issued an executive order directing officials within his administration to make changes to a student loan forgiveness program for public service workers, specifically to exclude nonprofit organizations that he claims have a “substantial illegal purpose.”
This directive appears to target groups that advocate for undocumented immigrants, diversity programs, or gender-affirming care for minors, among others, as the Trump administration has aimed to withdraw federal support from initiatives that provoke criticism from the right.
The order, released on Friday, is the latest in a series of efforts to revise the loan forgiveness program, which has historically subjected borrowers to frequent changes in rules and administrative hurdles.
The Public Service Loan Forgiveness program was established by Congress in 2007 and cannot be abolished without congressional approval, although the Education Department has some discretion regarding its implementation. Mr. Trump’s executive order instructed the education and treasury secretaries to modify the program to exclude employees from organizations that support illegal activities, providing examples such as “aiding or abetting” violations of federal immigration laws.
The Trump administration has adopted an expansive interpretation of what constitutes support for illegal activities. The order listed organizations that engage in “illegal discrimination” as examples, a stance the administration has previously linked to diversity and inclusion efforts.
It appears that the order also seeks to impact organizations that endorse gender-affirming care, stating that loan forgiveness would exclude any entity that supports “child abuse, including the chemical and surgical castration or mutilation of children.”
Additionally, Mr. Trump’s order specifically mentions organizations that exhibit a “pattern” of violating state laws against “trespassing, disorderly conduct, public nuisance, vandalism, and obstruction of highways,” language that could potentially be directed at groups involved in political demonstrations. Another provision targets entities that support “terrorism,” a term Trump officials have previously used to describe anti-Israel protests.
Typically, such changes would require a formal rule-making process, which might take months or years and include opportunities for public input. However, the Trump administration has frequently acted outside apparent legal boundaries, likely causing distress for those relying on this intricate program.
The loan program was established during President George W. Bush’s administration to encourage individuals to pursue careers in government and qualifying nonprofit sectors by alleviating their student debt. After completing 120 monthly payments — necessitating at least a decade of service in qualifying positions — borrowers may qualify to have their outstanding federal student loans erased.
However, the program has gained a reputation for being a confusing maze, with administrative challenges and loan servicing problems leading to a rejection rate of up to 99 percent for those seeking forgiveness. The Biden administration utilized waivers and exceptions to remove barriers, allowing over one million individuals to clear debts totaling $79 billion through the program.
Approximately two million borrowers have made qualifying payments towards their obligations for relief under this program. Many of these borrowers anxiously await the moment they reach the necessary 120 payments.
The program is available to borrowers in government positions — at the federal, state, or local level — and those working for IRS tax-exempt nonprofits under the 501(c)(3) statute. While some other nonprofit organizations qualify, several are exempt, including labor unions and partisan political groups.
Throughout the program’s history, there has been considerable confusion regarding what constitutes “public service.” In 2019, three attorneys won favorable judgments after being classified as ineligible.
Mr. Trump’s order appears to be targeting specific disfavored organizations in a manner reminiscent of a bill passed last year in the House aimed at allowing the government to revoke the tax-exempt status of nonprofits accused of supporting terrorist groups. Democrats expressed concerns that the bill could be weaponized by Mr. Trump against his political adversaries. Ultimately, the bill did not advance in the Senate.
Ron Lieber and Erica L. Green contributed reporting.
