Trump Order Denies Student Loan Relief to Some Nonprofit Workers
WASHINGTON — President Trump is ordering changes to the Public Service Loan Forgiveness program that would disqualify workers of nonprofit groups deemed to have engaged in “improper” activities.
Modifying the Program
An executive order signed Friday directs the Education Department to modify the program to deny loan relief to some borrowers. It would exclude loan forgiveness to people whose work is tied to illegal immigration, foreign terrorist groups or other illegal activity.
Eligibility Requirements
Congress created the program in 2007 to encourage careers in the government or nonprofit groups. It offers to cancel any remaining student debt after borrowers make 10 years of payments while working in public service. It’s open to government workers, teachers, police, religious pastors, and certain nonprofit employees, among others.
Borrower Numbers
More than 2 million Americans have eligible employment and open student loans, according to December data from the Education Department.
Backlash from Advocates
At her Senate confirmation hearing, Education Secretary Linda McMahon pledged to continue Public Service Loan Forgiveness as ordered by Congress. “That’s the law,” she said in response to questions from Sen. Tim Kaine (D-Va).
Under current rules, nonprofits are eligible if they focus on certain areas including public interest law, public health, or education. Trump’s order appears to target those who work in certain fields at odds with his political agenda, including immigration.
Advocates have gone to court to defend the program in the past, and Trump’s action is almost certain to face legal challenges. It drew quick backlash from advocates.
“Threatening to punish hardworking Americans for their employers’ perceived political views is about as flagrant a violation of the 1st Amendment as you can imagine,” said Aaron Ament, president of the National Student Legal Defense Network.
Legal Challenges Ahead
Updating eligibility rules typically requires the Education Department to go through a lengthy federal rulemaking process. Any new regulation that started this year would usually not take effect until 2027.
History of the Program
The forgiveness program has been the subject of a political tug of war since Trump’s first term, when borrowers first started hitting the 10-year finish line.
The vast majority who applied for relief in 2017 were rejected because they were found to have enrolled in ineligible payment plans or failed to meet other criteria. An investigation by a federal watchdog group concluded the Education Department had failed to make the program’s eligibility rules clear.
Under President Biden, the Education Department loosened the program’s rules, through a federal process, expanding eligibility to people who would have been denied previously.
Conclusion
Trump’s order has sparked controversy and is likely to face legal challenges. The Public Service Loan Forgiveness program has been a source of debate among politicians and advocates, with some arguing it is too broad and others arguing it does not go far enough. Ultimately, the program’s fate will depend on the outcome of the legal challenges and the actions of future administrations.
FAQs
What is the Public Service Loan Forgiveness program?
The program was created by Congress in 2007 to encourage careers in public service, such as government, non-profit, or teaching, by forgiving student loans after 10 years of payments.
Who is eligible for the program?
Eligible borrowers include government workers, teachers, police, religious pastors, and certain nonprofit employees, among others, who work in public interest law, public health, or education.
How many borrowers have applied for loan forgiveness?
More than 2 million Americans have eligible employment and open student loans, according to December data from the Education Department.
What is the purpose of the program?
The program aims to encourage people to pursue careers in public service, which are often underpaid and underappreciated, by providing a financial incentive in the form of loan forgiveness after 10 years of payments.
