How Trump wants to narrow a major student-loan forgiveness program that millions of borrowers rely on

The lengthy process of changing a student-loan forgiveness program for millions of public servants is underway.

President Donald Trump signed an executive order in March aimed at limiting the Public Service Loan Forgiveness program, created in 2007 to forgive student debt for government and nonprofit workers after 10 years of qualifying payments.

While it’s unclear which specific organizations — and how many borrowers — could lose PSLF eligibility, the executive order signaled that organizations facilitating transgender healthcare or engaging in disability discrimination, which the administration defined as “anti-American” activities, could be on the line.

That question dominated the discussion during negotiation sessions that took place on June 30 through July 2, during which representatives of the Department of Education met with a range of stakeholders to help craft new language for PSLF.

A draft of the department’s proposal to change PSLF, circulated among negotiators, shed more light on how the administration seeks to change the debt relief program. Specifically, the proposal includes revising the definition of a qualifying employer “to ensure that organizations that engage in activities that have a substantial illegal purpose” are not eligible for PSLF.

Those illegal purposes, per the proposal, include discrimination, like a violation of the federal disabilities act; violations of federal immigration law; what the department characterizes as “chemical castration or mutilation,” like the use of puberty blockers or hormones to help a transgender person transition; and acts of terrorism.

The education secretary would determine if an employer has engaged in any of those activities on or after July 1, 2026. If the secretary finds any violations, payments a borrower made toward PSLF while working for the ineligible employer would not count.

Some of the negotiators on the committee expressed concerns with making changes to the PSLF eligibility criteria.

“I don’t see where the secretary has the authority to remove the employer eligibility definition,” Betsy Mayotte, the president of The Institute of Student Loan Advisors and a representative of student-loan borrowers, said during a session. She added that “these jobs are essential to the communities that they serve. So the intent of Congress was not to narrow the eligibility. It was to make it as expansive as possible under the statute that they wrote.”

Jacob Lallo, a general attorney with the Department of Education, said that “there is broad rulemaking power for the secretary to promulgate regulations that interpret statutes. That is a long-standing part of American agency and administrative law.”

While negotiations have concluded, the committee ultimately did not reach consensus, and any changes will take time to become finalized. As the Department of Education works on the final text to amend PSLF, there will be more opportunities for public comment.

“I’m proud that the committee members representing institutions of higher education, veterans, taxpayers, borrowers, and the business community have helped fulfill one of President Trump’s promises to ensure that PSLF does not subsidize organizations that are breaking the law,” Acting Under Secretary of Education James Bergeron said in a statement.

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‘Borrowers organized entire careers around this promise’

Some negotiators raised the alarm on establishing new definitions in areas that are not directly related to student loans, like the clause seeking to include the use of puberty blockers as an example of chemical castration.

“I don’t think that the folks assembled to be part of this rulemaking were assembled for their medical expertise,” Abby Shafroth, a representative from the Student Loan Borrower Assistance Project, said. “I think we’re here with student loan expertise, and so I would feel very uncomfortable setting a new legal definition for these medical terms.”

Negotiators on behalf of the Department of Education maintained that the intent of limiting PSLF is not to completely overhaul the program; it’s to ensure that those participating in the program have employers who are delivering a public service to the American public. The proposal would also allow employers that the secretary determines to be ineligible for PSLF to respond to and challenge the department’s findings before a final decision.

Trump’s original executive order said that PSLF has previously “misdirected tax dollars into activist organizations that not only fail to serve the public interest, but actually harm our national security and American values, sometimes through criminal means.”

It did not provide specific examples of those activities, leaving some borrowers who rely on the program on edge. One borrower advocate, who spoke during the public comment period of negotiations, said that “people are paralyzed by anxiety because rules keep shifting.”

“Borrowers organized entire careers around this promise, and now they live in constant fear of the next change,” she said. “The currently proposed barriers will do little to stop wrongdoing, but will create enormous administrative burden.”

Borrowers who rely on the program previously told Business Insider that any change to the program puts the relief they are depending on at risk.

“I’m so close to the finish line,” Jeff Hughes, a public service worker enrolled in PSLF, said. “I really hope that the program continues as is because we need some more good people out there doing good work.”

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