A new student loan battle is underway after the Trump administration made a change to a popular repayment plan that opponents say will allow the Education Department to deny relief to its political opponents.
The department said it will change the Public Service Loan Forgiveness (PSLF) program, a repayment plan for government workers or nonprofit employees that allows full loan forgiveness after 10 years of payments, to deny those involved in “unlawful activities.”
But after defining “unlawful activities” to include those involved in transgender care and some immigration services, two lawsuits were filed, and advocates are gearing up for a fight.
“I think it’s pretty concerning. I think it opens up far too much, too great a possibility that employers will be targeted based on their politics or their ideology to make their employees ineligible for PSLF,” said Neil McCluskey, director for the Center for Educational Freedom at CATO Institute.
“I think we need to look particularly at this idea that the secretary of Education only needs a preponderance of evidence to decide that some employers are doing things that are largely illegal, and then they can cut them off. And so, it strikes me that there’s far too much leeway where employers disfavored by whoever’s in the White House, but in this case disfavored by the Trump administration, could lose this PSLF eligibility,” he added.
The PSLF rule is set to go into effect next July, but the pair of lawsuits filed Monday hopes to stop the efforts in its tracks.
One was filed by almost two dozen Democratic states, which argue the policy could affect teachers using “inclusive” curricula, immigration lawyers and health care workers who provide transgender care.
The other suit was filed by advocacy groups, teachers unions and local cities, arguing the policy is a violation of the Higher Education Act.
“This administration has, yet again, unlawfully targeted people who work in the public interest. And so we again are in court,” said Skye Perryman, president and CEO of Democracy Forward. “Politically motivated retaliation, like what the administration has done here, should have no place in America. We are honored to represent this powerful coalition in defense of the people’s rights.”
The Trump administration has made a point of using schools, particularly colleges and universities, to advance its other policy goals and go after political opponents.
A slew of international students and faculty were arrested earlier this year and are now fighting against deportation after they were targeted over involvement in the pro-Palestinian movement.
And the Education Department is pulling money from K-12 districts that don’t comply with demands to change their policies so transgender students cannot use the bathrooms or be on the sports teams they choose, a demand also placed on higher education institutions.
“I think it’s just … continued attempts by this administration to push the boundaries of what it can and can’t do regarding existing law,” said Alex Lundrigan, policy and advocacy manager for Young Invincibles.
“The rule needs to be rescinded because it’s one, illegal for several reasons, and two, it’s directly harmful. The department needs to rescind the role,” he added. “I think, in general, that’s what people are looking for with regards to the Trump administration, is that, when he violates the law or statute that’s written and passed by Congress, that the proper check is put in place.”
This is only the latest fight for student loan advocates as Republicans, in this year’s “big, beautiful bill,” moved to shrink the number of repayment options and put limits on how much students can borrow from certain programs.
The Education Department argues its new rule will be enforced neutrally across all nonprofit organizations eligible for PSLF.
“It is unconscionable that the plaintiffs are standing up for criminal activity,” Under Secretary of Education Nicholas Kent said in a statement. “This is a commonsense reform that will stop taxpayer dollars from subsidizing organizations involved in terrorism, child trafficking, and transgender procedures that are doing irreversible harm to children.”
“The final rule is crystal clear: the Department will enforce it neutrally, without consideration of the employer’s mission, ideology, or the population they serve,” Kent added.
Advocates say if a truly criminal employer were targeted, that would be one thing. But they note that providing transgender care or fighting for immigrants’ rights is not necessarily against the law.
“There may be some way say, if some employer was found guilty in a court of law of primarily supporting illegal things, you might say they could be cut off. But that is not the standard they use here,” McCluskey said.
