The Trump administration on Wednesday abandoned its legal effort to overhaul the popular Public Service Loan Forgiveness program.
The Justice Department had appealed June rulings that sided with advocates who argued the changes could turn the loan forgiveness program into a vehicle for political retaliation. On Wednesday, however, the department withdrew two appeals through brief, single-sentence joint agreements requiring each side to cover its own legal fees.
Federal officials did not explain the decision, while advocates celebrated 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 with 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 PSLF program was created to encourage careers in government, public schools, police and fire departments, public hospitals and nonprofit organizations. Under the program, qualified employees can have their remaining federal student loan balances forgiven after making payments for 10 years.
Last fall, the Trump administration introduced a rule that would have given Education Secretary Linda McMahon authority to remove employers from the program if she determined that their work served a “substantial illegal purpose.”
Critics said the rule’s broad wording appeared aimed at organizations supporting undocumented immigrants or transgender youth. Its implementation could have affected borrowers employed by schools, public hospitals and legal aid organizations.
The proposed changes would have significantly reshaped a program that has erased student loan debt for more than 1 million Americans.
Shortly before the rule was scheduled to take effect in July, U.S. District Judge Myong Joun in Massachusetts struck down the Education Department’s changes. Joun found that the agency had exceeded its authority and that the rule threatened First Amendment free-speech protections. The decision followed lawsuits brought by more than 20 states, a coalition of nonprofit organizations and several cities.
That same day, Washington District Judge Amir Ali reached a similar conclusion in a separate case filed by nonprofit groups.