The Trump administration has announced plans for a major revamp of the Public Service Loan Forgiveness (PSLF) program, as reported by the Associated Press on Monday. These proposed changes stem from concerns within the administration that federal funds have been supporting organizations deemed to be operating outside legal boundaries.

Newsweek has reached out to the Department of Education (ED) for further comment.

Why It Matters

Established in 2007, the PSLF program offers student loan cancellation to government employees, including teachers and firefighters, and many nonprofit workers, after they complete 10 years of qualifying payments. If these proposed changes by the White House are put into effect, advocates warn of potential negative consequences and greater instability for borrowers whose loan forgiveness relies on their employers’ ongoing eligibility.

The ED’s proposal comes after an executive order signed by Trump in March. This initiative is currently undergoing a regulatory process, with finalization anticipated by July 2026.

What To Know

The Trump administration’s intended PSLF revisions would grant the Department of Education the authority to remove loan forgiveness eligibility from organizations it determines have engaged in “illegal activities.” The draft rules include definitions related to immigration, terrorism, and transgender issues, which have sparked apprehension among advocates and education professionals who fear subjective or politically driven enforcement.

Under the ED’s draft proposal, the secretary would have the power to decide which organizations are involved in “illegal activities” and should be disqualified from PSLF. This specifically includes organizations that allegedly assist in federal immigration law violations, support foreign terrorist groups, or contradict anti-discrimination laws.

Alyssa Dobson, financial aid director at Slippery Rock University, expressed concern to the AP, stating that the rule could be used against “entire cities and entire civil structures.”

The ED formed a 10-person advisory panel to develop the regulatory language for the PSLF overhaul. Despite three days of discussions, the participants failed to reach a consensus, leaving crucial details unresolved, according to USA Today.

Some borrowers are now worried they might lose their PSLF eligibility because of their employers’ activities.

“For those currently enrolled in PSLF, now is the time to stay informed and connect with the entity overseeing your participation,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. “While not all organizations will be affected, some could, and you don’t want to be caught in a situation where the rules for forgiveness change, and you’re unsure if you and your employer still qualify.”

Beyond the regulatory disputes, technical problems have also surfaced. The Department of Education reportedly paused payment count tracking for income-driven repayment (IDR) and PSLF borrowers due to system failures, following staff layoffs and reporting errors, Forbes reported. Borrowers are currently unable to monitor their progress toward forgiveness, and significant delays have emerged in updating PSLF statuses. While the PSLF tracker on StudentAid.gov remains accessible, updates are inconsistent, adding to borrower uncertainty.

“Borrowers were left in the dark about their progress toward forgiveness. Add to that the layoffs within the Department of Education and the growing backlog of applications, and it’s clear the system is under stress,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek.

He added: “That said, much of the PSLF program was created by Congress—meaning executive orders alone can’t fully dismantle it. While the administration may attempt to restrict access or redefine eligibility through regulatory changes, they can’t eliminate the program without new legislation.”

What People Are Saying

The Institute for College Access & Success told Newsweek in a statement: “We urge the Department to reverse course and ensure that PSLF eligibility is never subject to a political judgment by the Executive Branch alone. By doing so, the Department can match Congressional intent for the program and preserve guaranteed Constitutional freedoms for state and local governments, colleges, and non-profits across the nation.”

Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: “Many borrowers are already in limbo, with little transparency into their loan status. As the administration appears focused on shrinking the department responsible for overseeing these programs, the process may become even more burdensome. My belief is that this administration wants borrowers to repay their loans—no exceptions—and will likely make forgiveness harder to achieve, regardless of circumstances.”

Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “Since being introduced in 2007, the Public Student Loan Forgiveness program has been one of the most popular tools the federal government has created for both helping students lessen their student debt and fill needed job roles in high poverty areas across the country.”

“And while it appears the program will continue to exist, the new administration is taking steps to eliminate forgiveness privileges for certain organizations – be they nonprofits, hospitals, or even state governments – that are participating in illegal activities, though it’s still not clear how this process will be implemented or exactly what activities qualify as illegal in the eyes of those revising the program.”

What Happens Next?

The Department of Education is currently gathering public comments on the proposed PSLF regulations, with the finalized rules expected to be published and enacted next year. In the interim, borrowers and employers should stay informed about regulatory developments as changes to PSLF eligibility, processing systems, and administrative oversight are debated and finalized. Further disruptions and delays in loan forgiveness processing may continue as technical and policy adjustments unfold.