Trump Rule Targeting Student Loan Forgiveness for Public Servants Faces Legal Challenge

Proposed regulations would allow the Education Department to disqualify employers from the Public Service Loan Forgiveness program based on their activities.

Published on Feb. 13, 2026

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The Trump administration's efforts to enact new regulations that would limit student loan forgiveness under the Public Service Loan Forgiveness (PSLF) program are facing a major legal challenge. A group of nonprofit organizations has filed a motion asking a federal court to block the proposed restrictions before they take effect in July 2026.

Why it matters

The PSLF program is a critical tool to incentivize borrowers to work in high-need public sector positions that typically pay less than the private sector. The proposed new rules would give the Education Department broad discretion to disqualify employers from PSLF eligibility based on their activities, which critics argue would allow the administration to 'weaponize' the program against certain organizations.

The details

The proposed PSLF regulations would allow the Education Department to disqualify employers from the program if the department determines the organization is engaged in activities with a 'substantial illegal purpose.' This includes actions such as providing healthcare services to transgender youth, facilitating violations of federal immigration law, or engaging in a pattern of illegal discrimination. Individual borrowers would have no recourse if their employer is deemed ineligible.

  • The proposed PSLF regulations were originally announced by President Trump in an executive order last March.
  • The final version of the new PSLF rules was published in the Federal Register last fall.
  • The new PSLF restrictions are set to take effect on July 1, 2026.

The players

Department of Education

The federal agency responsible for implementing the PSLF program and proposing the new restrictions.

Robert F. Kennedy Center for Justice and Human Rights

A nonprofit organization leading a legal challenge against the proposed PSLF regulations.

Nicholas Kent

Under Secretary of Education who announced the publication of the final version of the new PSLF rules.

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What’s next

The court will allow the Department of Education time to file a formal opposition to the summary judgment motion. After that, the court will likely hold a hearing where both sides can make oral arguments before issuing a ruling on whether to block the proposed PSLF restrictions.

The takeaway

This legal challenge highlights the broader debate over the role and scope of the PSLF program, with the Trump administration seeking to limit its reach and critics arguing the proposed restrictions violate the law and undermine the program's purpose of supporting public service careers.