The Trump administration has moved to end a legal fight over proposed changes to a student loan forgiveness program used by more than 1 million Americans.
On Wednesday, the Department of Justice dropped two appeals over its planned overhaul of the Public Service Loan Forgiveness program. The withdrawals came in single-sentence joint agreements in which each side agreed to pay its own legal fees.
No explanation was offered by federal officials and advocates welcomed the outcome.
“The Trump administration’s attempt to weaponize public service loan forgiveness against organizations it disagrees with was anti-democratic and unlawful from the start," Dan Zibel, an attorney for the group Student Defense, said in a written statement. "This is a significant victory for millions of Americans who have dedicated their careers to public service.”
The program, known as PSLF, was created to make careers in government, public schools, fire and police departments, public hospitals and nonprofits more attractive. It works by forgiving the loans of qualified employees once they have made a decade’s worth of payments.
Last autumn, President Donald Trump’s administration drafted a new rule for the scheme which would have allowed Education Secretary Linda McMahon to remove employers from the program if she judged their work to have a “substantial illegal purpose.”
The wording of the rule was vague, and it was aimed at employers who support undocumented immigrants or transgender youth. Borrowers who had worked at schools, public hospitals and legal aid groups could have been affected.
The rewrite would have amounted to a major reworking of the program. The Department of Justice had appealed after federal judges ruled against the administration in June. Those rulings had favored advocates who argued the program risked becoming a tool for political retribution.
The changes were due to take effect in July but before they could, U.S. District Judge Myong Joun in Massachusetts vacated the U.S. Education Department’s changes. He said the changes overstepped the agency’s power and threatened to violate First Amendment protections for free speech.
His ruling responded to a pair of lawsuits filed by more than 20 states, together with a coalition of nonprofit groups and cities. On the same day, District Judge Amir Ali in Washington issued a similar ruling. His case had been brought by nonprofit organizations.
Trump admin reportedly mulling new fines for borrowers
Aside from the change to PSLF that was struck down, Americans are facing additional uncertainty about the fate of their student loans. The Trump administration is said to be considering fining Americans who are late on their student loan repayments, according toThe Washington Sun.
The Treasury took over the management of the U.S. government’s $1.7 trillion student loan portfolio from the Department of Education in late September in a policy that was first announced in March.
Asked about the reported plan to fine borrowers, the Treasury pointed The Independent to recent remarks made by Treasury Scott Bessent, who unveiled a new online portal to make it easier for students to keep track of what they owe.
Bessent said on Sept. 30 that “restoring fiscal responsibility” was paramount and that the service would provide defaulted borrowers with “a clearer path back to repayment.”