The Education Department in 2025 had issued a rule to block employers from receiving Public Service Loan Forgiveness benefits if the organization engages “in activities with a substantial illegal purpose.” Kevin Carter / Getty Images
The legal fight over the public service student loan forgiveness overhaul may be over
Two different federal judges in June ruled that the Education Department’s changes to the program were unlawful. On Wednesday, the Trump administration dropped its appeals.
The Trump administration dropped its appeals in a pair of lawsuits challenging the Education Department’s overhaul of the Public Service Loan Forgiveness program, which critics argued would enable officials to block organizations from participation based on political differences, leaving in place court decisions that prevented the changes from taking effect.
“Countless essential workers rely on this program, and weaponizing it for political purposes would hurt not just these workers but the communities they serve,” said American Federation of State, County and Municipal Employees President Patrick Moran in a statement. “We’re glad the administration is now following the law and abandoning this illegal scheme.”
The Education Department in 2025 issued a proposed rule to block employers from receiving PSLF benefits if the secretary deems the organization engages “in activities with a substantial illegal purpose.” The program forgives the balances on certain federal student loans for individuals employed by government or not-for-profit organizations after 10 years.
In response, a coalition of cities, nonprofits and unions filed a lawsuit, arguing that the rule amounted to the Trump administration trying to hurt organizations they’re ideologically opposed to, particularly those that serve diverse communities, migrants or trans youth.
District Judge Myong J. Joun sided with the plaintiffs in June, deciding that Education’s rule violated the First Amendment and that department officials exceeded their authority in promulgating it. The same day, District Judge Amir H. Ali also ruled in a similar lawsuit brought by a different group of nonprofits that the regulation should be vacated.
While the Trump administration appealed both decisions, lawyers for the government and respective plaintiffs submitted agreements on Wednesday to dismiss both appeals.
“The scheme by [Secretary] Linda McMahon to try to hurt public service workers is illegal on its face and was slapped down by a federal judge months ago,” said Winston Berkman-Breen — the legal director of Protect Borrowers, one of the organizations that represented the former plaintiffs — in a statement. “It’s good that Trump’s lawyers gave up their fight and bowed to reality.”
Education referred questions about the case to the Justice Department. The DOJ declined to comment.
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