Tens of thousands of nonprofit employees could be affected by the Trump Administration’s efforts to narrow a student loan cancellation program that aids public service workers.
Employees at organizations that do work related to issues including immigration and gender-affirming-care would be at risk of losing eligibility for the Public Service Loan Forgiveness (PSLF) program, which has wiped the student loan debts of hundreds of thousands of government employees and others at certain nonprofit organizations, if changes proposed by the Administration are adopted.
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President Donald Trump directed that PSLF be reshaped in a March Executive Order that claimed the program aided “activist organizations” that harm “national security and American values.” Trump asked federal officials to propose revisions to exclude certain organizations that he said “engage in activities that have a substantial illegal purpose” from being eligible for forgiveness under the program.
The order noted that such activities would include “aiding or abetting” violations of federal immigration law or “illegal discrimination” and providing gender-affirming care for those aged 18 or under, among other things. A draft proposal of changes has since been released by the Education Department, which is now putting together a formal proposal that could take effect next year.
Critics argue that the proposed adjustments would specifically target employees working for organizations that oppose the Trump Administration’s agenda, which in part includes more aggressive immigration enforcement and the targeting of gender-affirming-care.
The Department of Education did not respond to TIME’s request for comment.
Here’s what to know about the program and how the Administration is seeking to change it.
What is the Public Service Loan Forgiveness program?
The Public Service Loan Forgiveness program, established under the College Cost Reduction and Access Act of 2007, offers tax-free loan forgiveness for government employees including teachers and firefighters and eligible nonprofit workers after they make 10 years of monthly payments towards their debt.
The forgiveness is only available for full-time employees. It has been viewed as a strong incentive for those considering a public service career.
More than a million borrowers have had their student loans cancelled through PSLF since December 2024, including 700,000 whose loans were forgiven under adjustments made by the Biden Administration to help more people earn forgiveness, according to the Department of Education.
Prior to the changes, student loan forgiveness advocates criticized the program for its slow-moving application process that they said set back borrowers. An NPR report found that some borrowers enrolled in PSLF would make repayments towards the program for years before being told they didn’t qualify due to having the incorrect loan or employer or failing to consolidate their loans.
The Biden Administration sought to remedy “past administrative failures” through an account adjustment plan that would allow borrowers to receive credit for previous months of repayment that were previously ineligible. That meant that payments made during periods of deferment or forbearance qualified towards the 10-year payment plan.
More than 780,000 borrowers submitted an application for PSLF from July 2024 through December, per Federal Student Aid data.
What changes is the Trump Administration proposing?
The Trump Administration is seeking to alter the types of nongovernmental employees whose loans are eligible for forgiveness through PSLF.
A draft proposal of the changes would prevent organizations engaged in “illegal activities” from benefiting from PSLF.
Its definition of activities that could bar organizations from eligibility, like that in Trump’s Executive Order, would include violations of federal immigration law and providing gender-affirming care for minors, as well as “child trafficking”—apparently also meant to target transgender minors—and discrimination. It defines “illegal discrimination” as violations of the Civil Rights Act, which could include engagement in diversity, equity, and inclusion policies.
In contrast with his predecessor, Trump has been a staunch critic of broad student loan forgiveness efforts. The White House has framed the proposed changes as a way to correct “abuse” of the program following the Biden-era amendments that it said “has increased the cost of tuition, burdened students with debt, and encouraged them to join organizations that undermine national security and the societal good.” Trump’s Executive Order, the White House said in a March fact sheet, “corrects this abuse by ensuring only legitimate public servants benefit, not those engaged in illegal or harmful activities.”
Critics of the effort to narrow eligibility, however, say the impact of the changes could be widespread, punishing borrowers for legal actions.
“If the proposed changes take effect, the Secretary of Education will be able to disqualify millions of borrowers from PSLF as retribution for their employers’ actions, even if those actions are legal,” Winston Berkman-Breen, legal director at the Student Borrower Protection Center, a nonprofit advocating for student loan forgiveness, wrote in a statement to TIME.
Berkman-Breen warns that the “illegal” actions the Administration appears to be targeting could be broad in scope. “Public school systems that teach the history of slavery in the United States could be disqualified for ‘aiding and abetting illegal discrimination.’ Fire departments and other first responders could be disqualified if they serve in the local government of a Sanctuary City providing support to undocumented children and families,” he says.
In order to assess eligibility, officials would review court judgements or other orders.
A panel of experts was convened by the Department of Education to review the proposal from June 30 to July 2 and drafted potential amendments. These included limitations on the proposed changes including protections for actions that fell within employees’ First Amendment rights. Ultimately, however, the panel failed to reach a consensus on recommendations.
The department will next prepare a formal proposal, which will undergo a public comment period before potentially being finalized.
Who could be impacted?
The proposed changes could potentially affect any public service worker enrolled in the program, according to experts. “The biggest concern is the amount of grey area that leaves room for the Department of Education to subjectively purge program participants,” says Jonathan Collins, assistant professor of political science and education at Teachers College, Columbia University.
The draft proposal would nullify payments made while a worker was employed at an organization that was found to engage in an “illegal purpose,” forcing them to find a new job if they want to be eligible for forgiveness.
Berkman-Breen of the Student Borrower Protection Center calls the proposed amendments an attempt to “attack civil society” and free speech. “The proposal gives the Administration broadsweeping authority to play ideological politics with people’s financial and professional lives,” he says.