After recently restarting student debt cancellation, the Trump administration has announced a rule tweak that will limit eligibility for loan forgiveness for some public servants.
The Department of Education is altering the definition of a “qualifying employer” for the Public Service Loan Forgiveness program, the agency said Thursday.
That program, which launched under former President George W. Bush, cancels debt after a decade of qualifying payments for Americans who work for non-profits or the government.
The 2007 program was an attempt to encourage people to pursue careers in public service.
The Trump administration said the program will now “exclude organizations that engage in unlawful activities such that they have a substantial illegal purpose, including supporting terrorism and aiding and abetting illegal immigration.”
The changes will take effect July 1, 2026.
The Department of Education did not reveal exactly which non-profits will no longer qualify for the program.
It signaled organizations that work with illegal immigrants and transgender people may no longer qualify for the program.
Borrowers who have currently or previously worked for an organization that no longer makes the cut will still get credit for the program until the change takes hold in July.
“Taxpayer funds should never directly or indirectly subsidize illegal activity,” Under Secretary of Education Nicholas Kent said in a statement.
The White House’s recent move to restart debt cancellation for millions of borrowers was a sharp pivot from its previous efforts to block some loan forgiveness plans.
President Trump has railed against the Biden administration’s loan forgiveness programs – which included debt cancellation for more than 1 million borrowers.
Outstanding student debt currently exceeds $1.6 trillion, with more than 40 million Americans holding student loans.
About 9 million borrowers are eligible for the Public Service Loan Forgiveness program, according to a 2022 estimate from nonprofit Protect Borrowers.
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