A particular type of anxiety is associated with working in public service; this type of job pays less than in the private sector, has higher demands than most people are aware of, and requires employees to think that the trade-off is worthwhile. The Public Service Loan Forgiveness program was a factor in that decision for many of those employees. Your federal student loans vanish after ten years of service. That commitment was made by Congress in 2007. That promise is not going away quietly, as two federal judges made evident last week.
On a Tuesday that most Americans missed, U.S. District Judge Myong Joun in Boston overturned new regulations from the Education Department that would have denied loan forgiveness to employees whose employers were found to have a “substantial illegal purpose.” District Judge Amir Ali of Washington, D.C., issued an almost identical decision. A day before the new regulations were supposed to go into effect on July 1st, both rulings were made. Anyone who was paying attention would have to hold their breath because the timing was so close.
The president claimed in an executive order issued in March 2025 that the program had directed tax dollars toward groups that undermine American values and national security, which prompted the Trump administration to push for changes to the eligibility requirements. The Education Department then released a final rule that defined “substantial illegal purpose” as supporting illegal immigration, participating in discrimination, and offering what the administration referred to as the “chemical and surgical castration of children”—a term used to describe gender-affirming care for transgender minors. The administration may have honestly thought that this was a sensible cleanup of an oversized program. However, the breadth of that language raised serious concerns about whether the true objective was something completely different.
The department’s framing did not appear to convince Judge Joun. He criticized the department for failing to link its definitions of illegal activity to actual criminal statutes and pointed out that the new regulations threatened to directly impose the administration’s policy preferences on employers. “The Department cannot create new criminal prohibitions through rulemaking,” he said. Additionally, he brought up a point that is hard to overlook: according to the department’s own estimates, the new regulations would actually affect fewer than ten employers annually. That is a remarkably flimsy defense for a policy with such a broad scope.
The organizations contesting the regulations filed more than 100 supporting briefs. The administration’s changes were not supported by any filings. Something is said by that asymmetry.
The law establishing the forgiveness program never gave the Education Department the power to create eligibility exceptions based on an employer’s perceived mission or political inclinations, according to the plaintiffs, which included over 20 states, numerous cities, and dozens of nonprofit organizations. There is a feeling that what the administration presented as a legal cleanup was actually more akin to a targeted mechanism—a tool that could, in reality, be used to penalize groups that support diversity initiatives, immigration rights, or transgender healthcare. Courts may continue to determine whether that was the intention or merely the result.
This decision marked the administration’s student loan agenda’s second courtroom defeat in a single week. A different rule that would have capped federal loan limits for graduate students studying nursing and healthcare was blocked by another judge in Washington, D.C. Although it’s too soon to tell how the administration will react—through appeals, new regulations, or something else entirely—a pattern is beginning to emerge.
These decisions are a relief for the over a million borrowers who have already had their loans forgiven under the program. The stakes seem more personal to public school counselors, city employees, nonprofit staff, and healthcare professionals who are still counting down their ten years. On the basis of a promise, they chose their careers. It is unsettling, at the very least, to watch that promise turn into disputed legal territory. For the time being, the courts are holding the line.
