The Trump administration has abandoned its effort to overhaul the Public Service Loan Forgiveness program, ending a legal battle over changes that would have barred some workers from accessing the scheme. In a filing on Wednesday, the administration said it was dropping its appeal of a June 30 federal court ruling that found the proposed overhaul unlawful. The move means the program will remain as Congress designed it, without the restrictions the administration had sought to impose.
The proposed changes, originally announced in August 2025 and finalized in October 2025, would have prevented people from participating if their employer engaged in certain illegal activities. Under the rule, workers for organizations involved in terrorism, immigration law violations or what the rule described as "chemical and surgical castration or mutilation of children" would have been disqualified. Department of Education Under Secretary Nicholas Kent had said at the time that the rationale was "supporting public servants who strengthen their communities and serve the public good, not benefiting businesses engaged in illegal activity that harms Americans."
Multiple nonprofits and cities challenged the rule in court, arguing it gave the Department of Education too much discretion in determining whether an organization was engaged in "a substantial illegal purpose." U.S. District Judge Myong Joun in Massachusetts vacated the rule just before it was set to take effect in July, saying it overstepped the Education Department's authority and threatened to violate First Amendment protections for free speech. District Judge Amir Ali in Washington issued a similar ruling in a separate case brought by nonprofit organizations.
Advocates for borrowers and nonprofit leaders praised the administration's decision to abandon the appeal. Dan Zibel, chief counsel of the advocacy group Student Borrowers, called it a "significant victory for millions of Americans who have dedicated their careers to public service." Diane Yentel, CEO of the National Council of Nonprofits, said the outcome "gives nonprofit employees the certainty that the loan relief they've earned through years of public service will be there for them."
The Public Service Loan Forgiveness program is designed for workers at government agencies, public schools, fire and police departments, public hospitals and nonprofits. It cancels outstanding student debt for eligible borrowers who make 120 monthly payments, or 10 years of participation. According to the Education Data Initiative, which collects data about the U.S. education system, almost 720,000 federal student loans were discharged through the program between 2018 and mid-2025.