The Trump administration has asserted that it should serve as the final authority in qualifying for Public Employee Loan Forgiveness, a change that will come into effect on July 1. This inclusion within the authority raises significant concerns, since no manager should have the collective power to redefine the eligibility of the official program created by Congress. Recent congressional efforts to repeal these new laws have already failed, as Republicans did not support a resolution that would reverse the Trump administration’s reforms.
To understand what these new rules mean, it is helpful to briefly review the program’s origins. The PSLF was established in 2007 under President George W. Bush’s College Access and Defunding Act to encourage college-educated employees to enter public careers such as teaching, policing, social work and nonprofit health care. Although straightforward in theory, the law lacked clarity, and inaccurate information from the federal government and loan servicers led to widespread confusion about eligibility and the forgiveness process. Early results showed these errors, with rejection rates as high as 99 percent.
In response, Congress created the Temporary Expanded Public Service Loan Program in 2018 to address this failure. This policy allowed borrowers to have their payment history reviewed, especially if they were placed on ineligible payment plans. Many borrowers take out the wrong types of loans, such as FFEL loans, or enroll in ineligible programs—often due to inaccurate information. In 2021, the Biden administration expanded these efforts, allowing borrowers to receive credit for certain past payments that would otherwise not have qualified for PSLF. Together, these changes reduced borrower uncertainty and demonstrated that the PSLF was beginning to work as intended.
Enter the Trump administration. In March 2025, President Trump issued an executive order titled “Restoring Public Employee Loan Forgiveness.” Drafted as a measure to protect taxpayers and national security, the order directs federal authorities to limit the eligibility of the PSLF by excluding individuals employed by organizations engaged in activities deemed to have a “substantial unlawful purpose.” The order reflected a shift from broad access to a selective approach consistent with the government’s interpretation of corporate behavior.
The accompanying final rule introduced a framework that allows the secretary of education to exclude employers under an “evidentiary consideration” standard. Under the law, organizations with employees who may be found ineligible for PSLF would include those deemed to have “aided and abetted violations of Federal immigration laws” or “have a pattern of aiding and abetting unlawful discrimination,” as well as organizations involved in providing gender-affirming health care to transgender youth. Recent actions show that the Trump administration is already targeting universities and high school districts with controversial “discrimination” claims, raising concerns about how widely these standards can be applied.
Simply put, the framework gives the secretary of education broad discretion to determine whether a previously eligible organization has engaged in a “substantial unlawful purpose.” Once that decision is made, the affected organizations lose PSLF eligibility and can only regain it by changing their practices to the satisfaction of the management under the terms of the corrective action plan or by waiting 10 years. In practice, legitimacy may also change with changes in governance, depending on whether future policy makers uphold or reverse previous decisions.
Within this framework, external oversight is close to non-existent. Borrowers themselves cannot appeal unemployment decisions, and the law provides few details about the employer transfer process. This accumulation of authority represents a significant expansion of bureaucratic discretion beyond the scope of the PSLF, which has few procedural rules to protect nonprofit institutions from changing political interpretations of compliance.
In addition, eligibility determinations can extend beyond individual organizations to broader areas, including citywide employees where local policies conflict with organizational priorities. In such cases, the eligibility of the PSLF may become subject to political disputes between local and regional governments. For example, changing the organizational definitions of municipal actions in cities like Chicago or St. Paul could jeopardize the legitimacy of civil servants who have long relied on the settlement of expectations.
These potential outcomes raise concerns that access to forgiveness depends not only on the employment of the borrower, but on changes in administrative judgments regarding the legality and compliance with laws at the federal or municipal level, instead of legal criteria established by Congress or decisions made by the courts. Such a mandate would put significant financial pressure on nonprofits that are seen as out of line with management priorities.
Under this framework, eligibility can vary widely across services. Some jurisdictions may target organizations such as Planned Parenthood or specific cities, while others may apply the same authority to different businesses. This diversity underscores the risk of turning the PSLF from a rules-based program into one subject to political decision-making, with serious consequences for borrowers who have made long-term career decisions based on the program’s sustainability.
Apart from the institutional implications, PSLF beneficiaries are also left to navigate deep uncertainty. My research shows that uncertainty is a powerful cause of borrower psychological distress, including suicidal thoughts. Recent interviews with participants underscore this finding: Many fear that years of progress in forgiveness may be brought to an abrupt halt, not because of their own failure, but because of an administrative decision that has no reasonable recourse.
Currently, the administration is facing ongoing lawsuits against the law. However, this is unlikely to prevent managers from trying to implement these changes, as past behavior suggests a willingness to continue with controversial policies despite legal uncertainty. This pattern reinforces the concern that, in the absence of rational checks, managers may continue to act in isolation even when their authority is challenged.
These new laws are not just administrative; they undermine the lives built on the promises made by Congress. Changing the PSLF from a statutory benefit to a self-determined, politically dependent one transfers significant and uncontrollable risk to borrowers. Given the Trump administration’s history of abrupt policy reversals, uneven spending and rulings fueled by emotional and cultural conflicts, granting this broad mandate to the PSLF in the executive branch is concerning. No administration, this one or any future one, should have the collective power to disrupt non-profit organizations they disagree with or disrupt the lives of borrowers planning their careers and futures with the promise of Public Employee Loan Forgiveness.
