Rulings Block New Eligibility Rules
Two federal judges struck down the Trump administration's overhaul of the Public Service Loan Forgiveness program on Tuesday, ruling in separate cases that the changes overstepped the Education Department's authority and risked violating First Amendment free speech protections. The rulings came one day before the new rules were set to take effect.
U.S. District Judge Myong Joun in Massachusetts vacated the department's changes, saying they exceeded the agency's power and threatened free speech. The ruling responded to lawsuits filed by more than 20 states, a coalition of nonprofit groups, and cities. In Washington, D.C., District Judge Amir Ali issued a similar ruling in a case brought by nonprofit organizations.
Program Background and Controversy
Congress created Public Service Loan Forgiveness in 2007 to encourage college graduates to work in government and nonprofit jobs, promising to forgive federal student loans after 10 years of public service. Last year, the Trump administration moved to add eligibility rules that would strip benefits from workers whose employers are deemed to have a “substantial illegal purpose.”
The overhaul targeted nonprofits and government organizations supporting causes at odds with the administration’s priorities. It gave the education secretary power to exclude groups engaged in trafficking, “chemical castration” of children, illegal immigration, or supporting terrorist organizations. The definition of “chemical castration” included hormone therapy or puberty-delaying drugs.
Impact on Borrowers and Nonprofits
The changes would have significantly reworked a program that has canceled loans for over 1 million Americans. Nonprofits and government groups said it undercut an important benefit that helps attract college graduates to lower-paying public service jobs. Diane Yentel, president and CEO of the National Council of Nonprofits, a plaintiff in the Massachusetts case, said, “This decision is a win for the communities that depend on local nonprofits and for the workers who serve them.”
Aaron Ament, president of Student Defense, a plaintiff in the Washington case, stated, “Public servants should not have to worry that the federal government will punish them because of their employer’s mission or perceived political views.”
Judicial Reasoning
Judge Joun said the new rules threatened to impose the administration’s policy views on employers and faulted the department for failing to connect its definitions of illegal activity to criminal statutes. “The Department cannot create new criminal prohibitions through rulemaking,” he wrote. He also questioned the department’s rationale, noting its own estimates that fewer than 10 employers would be barred annually. “The Department offers no explanation for why a Final Rule with such sweeping consequences is necessary to address the possibility that, at most, ten employers each year may be engaging in illegal activity,” Joun wrote.
Under Secretary of Education Nicholas Kent said the department was evaluating next steps. “The Department stands behind this commonsense policy to ensure that taxpayer dollars are never used to subsidize illegal activities,” Kent said in a statement.
