Public Service Loan Forgiveness (PSLF) is an important program that allows public servants, such as public school teachers and nonprofit employees, to have their loans forgiven after years of serving the public good. Oftentimes these public service jobs are unable to pay as much as their private-sector counterparts, leaving those who choose to serve in a more precarious financial position than private sector employees. Rather than forcing individuals to choose between their own economic stability or continuing to serve the public good, PSLF allows employees to stay with their organizations without the undue burden of large amounts of student loan debt. First implemented in 2007, the program was already stringent in its qualifications, with employees having to have made 120 on-time payments while working for a qualifying employer. Despite these stringent requirements and overall success, this vital program to support public servants and their work is now under attack.
On March 7, 2025, the presidential administration issued an Executive Order titled “Restoring Public Service Loan Forgiveness” greatly curtailing which organizations’ employees were eligible for PSLF. This Executive Order excluded organizations who were deemed to engage in actions such as “aiding illegal immigration” or “civil disobedience,” among other baseless, politicized, and vague categories and actions. After the initial Executive Order, the Department of Education and the administration formalized these new limitations, resulting in wide sweeping changes to who qualifies for PSLF. The most important and jarring language from these news rules was the language excluding those who work for organizations that have “substantial illegal purpose,” a clear attempt to discourage engagement with organizations that do essential work with communities in need.
The administration's definition of “substantial illegal purpose” is hazy, but one thing is certain: this Executive Order and amendments to the rules of qualifications for PSLF were intended to have a chilling effect on nonprofits fighting for progressive causes. The Trump administration’s “final rule” on the matter, which is slated to go into effect on July 1st, 2026, allows the administration to designate nonprofits actions as “supporting terrorism.” This categorizes these nonprofits as engaging in a “substantial illegal purpose” and permanently disqualifies employees from PSLF. Efforts such as fighting for access to gender affirming care for trans youth or providing assistance to undocumented immigrants, critical services that so many nonprofits across Nebraska provide, are grounds to be deemed a “terrorist supporting organization.” Not only does this mean that many nonprofit employees working to serve our most vulnerable neighbors are now excluded from PSLF, but the overall work of nonprofits is under attack. The acts designated as terrorist supporting are simply acts of public service and advocacy that are ideologically opposed with the current administration, rather than having anything to do with terrorism. We must fight back against these new rules, not only to protect PSLF, but also to protect the futures of nonprofits providing vital services that are now outlandishly being defined as “terrorist supporting.”
Organizations across the country are joining together to rebuke these new guidelines, collecting public comments on the matter, as well as using their voices together in coalition. State associations of nonprofits such as the Nonprofit Association of the Midlands here in Nebraska voiced opposition to this new “final rule” that puts PSLF at the whims of the administration's ideology. Similarly, many states themselves have also joined forces, filing a lawsuit that challenges this new policy arguing that “Congress granted the benefit to all government workers, with no room for the Education Department to add limits,” as well as taking issue with the phrase "substantial illegal purpose.” Additionally, another group of cities, nonprofits, and labor unions filed a similar oppositionary lawsuit.
As these cases work their way through the courts, we must remember that attacks on Public Service Loan Forgiveness represent so much more than just an undue economic burden on tireless public servants. As the Trump administration attempts to undermine and prevent organizations from providing necessary services for their communities, they attack those who are closest to this work first. In the face of these attacks, nonprofits and our partners are not backing down. Continue to make your voice heard about how essential these services are and how important the PSLF program is in enabling public servants to do their jobs.