The Public Service Loan Forgiveness program provides non-profit and government employees a pathway for forgiveness of their federal student loans, recognizing the financial trade-offs associated with working in the public interest. In October 2025, the Department of Education issued a rule that would disqualify an employer from the PSLF program if the Secretary of Education determined that the organization had a “substantial illegal purpose.” Under the rule, ED gave itself the unilateral power to decide whether an organization had such a purpose, based on the organization’s participation in activities that the current administration disapproves of concerning immigration, discrimination, gender-affirming care, and other matters.
The rule, scheduled to go into effect July 1, was challenged by states and non-profit employers in district courts in both Massachusetts and D.C. The plaintiffs argued the rule was contrary to law and the Secretary’s statutory authority, was arbitrary and capricious, and violated the First Amendment.
Yesterday, judges in both districts found the rule unlawful and set it aside. The press release about the DC case, brought by Public Citizen and Student Defense on behalf of the Robert & Ethel Kennedy Human Rights Center, the American Immigration Council, The Door – A Center of Alternatives, Inc., and the League of United Latin American Citizens (LULAC), is available here. The consolidated decision in the Massachusetts cases is available here.
