The timing has an almost theatrical quality. A federal judge in Massachusetts intervened one day before the Trump administration’s new limitations on Public Service Loan Forgiveness were scheduled to go into effect, essentially saying, “Not so fast.”
On June 30, U.S. District Judge Myong J. Joun declared the Education Department’s updated PSLF program eligibility rules to be illegal, arbitrary, and in violation of First Amendment rights. In a related case brought by nonprofit organizations, Judge Amir H. Ali in Washington, D.C., issued a different decision that same day. The same outcome was reached by two distinct courts and two distinct plaintiff groups.
There has never been a straightforward Public Service Loan Forgiveness program. It was established by Congress in 2007 with what appeared to be a clear promise: if you work for ten years in a qualifying government or nonprofit position and make 120 monthly payments, your remaining federal student debt will be forgiven. For the majority of its existence, the program has actually been mired in bureaucratic confusion. Millions of applications have been submitted. Many were turned down. For many borrowers, the well-documented administrative headaches have been quietly devastating.
The final rule issued by the Trump administration in October of last year added to the already complex picture. It established the notion of “substantial illegal purpose” as a criterion for employers to be disqualified. That seems reasonable at first glance. No one is arguing that federal benefits should be given to employers who support terrorism or human trafficking. However, detractors—and eventually both judges—emphasized that the definitions were sufficiently ambiguous to encompass a much broader scope. Sanctuary cities, immigration lawyers, and organizations whose work conflicted with the administration’s declared priorities could all be targeted.
In the Massachusetts decision, Judge Joun did not hold back. He pointed to the administration’s public criticism of immigration attorneys and its executive order targeting sanctuary cities as proof that political preferences were influencing policy in addition to legal principles. “Even beyond immigration,” Joun wrote, “the Administration has threatened to take legal action against generally lawful activity that it finds objectionable.”” It’s worth sitting with that line. Judges rarely use this type of language carelessly.
Beyond the immediate result, there is a more significant legal aspect to this. The Supreme Court’s 2024 decision to overturn the 40-year-old Chevron deference doctrine, which instructed courts to defer to federal agencies when interpreting ambiguous statutes, also influenced Joun’s decision. Judges must now decide for themselves what Congress truly intended in the absence of that deference. In this instance, Joun came to the conclusion that Congress never granted the Education Department the power to amend its own definition of a qualifying public service position in the manner that the Trump administration tried.
The decisions are a true relief for the state governments, unions, and nonprofits that filed these lawsuits. The National Council of Nonprofits had claimed that the rule would make it difficult for them to hire and retain talent because employees with student loan debt would just steer clear of companies that could lose their eligibility at any time due to circumstances beyond their control. Perhaps the most tangible harm in this case was worry. Not ideology. Just the practical reality of someone with $90,000 in loans weighing a job offer.
For its part, the Education Department stated that it was considering its next course of action. The policy was defended by Under Secretary Nicholas Kent as shielding taxpayers from funding illicit activity. Whether the department will file an appeal, request changes to the rule, or take a completely different tack is still up in the air. It is evident that the administration has now lost twice in a single day on this matter, in two different courts and under two different legal theories.
As this develops, it seems as though the PSLF program has grown beyond a student loan policy. It has evolved into a stand-in for a more extensive debate concerning the definition of public service, who gets to define it, and whether the federal government can influence nonprofit employers’ ideological alignment through debt relief. Judge Myong Joun gave a firm “no” in response to that final query, at least for the time being.
