The U.S. Department of Education has released a Notice of Proposed Rulemaking (NPRM) aimed at changing eligibility requirements for the Public Service Loan Forgiveness (PSLF) program. The proposed rules would stop PSLF benefits from being granted to employees whose organizations are involved in activities with a substantial illegal purpose.
Under the proposal, organizations that support terrorism, aid or abet discrimination or violations of immigration laws, or are involved in child abuse would not qualify as eligible employers under the PSLF program. The department states that these measures are intended to prevent taxpayer-funded benefits from going to groups that do not provide a true public service.
“President Trump has given the Department a historic mandate to restore the Public Service Loan Forgiveness program to its original purpose—supporting public servants who strengthen their communities and serve the public good, not benefiting businesses engaged in illegal activity that harm Americans,” said Under Secretary of Education Nicholas Kent. “The federal government has a vital interest in deterring unlawful conduct, and we’re moving quickly to ensure employers don’t benefit while breaking the law.”
The NPRM follows President Trump’s Restoring Public Service Loan Forgiveness Executive Order issued in March. In response, the Department held two public hearings in May and set up a negotiated rulemaking committee with borrowers and higher education stakeholders last month to review draft regulations. Feedback from these sessions informed the drafting of the new rules.
Section 492 of the Higher Education Act requires input from both the public and stakeholders before such regulations can be published. After gathering advice and recommendations, negotiated rulemaking is conducted to develop proposed regulations.
On March 7, President Trump signed an executive order instructing revisions to PSLF so that organizations engaged in illegal activities would be excluded from qualifying as public service employers. On May 12, the Department announced plans for a committee to prepare regulatory changes for PSLF. The negotiated rulemaking session concluded on July 2 after three days; most committee members supported refining employer definitions for PSLF but consensus was not reached due to one objection.
Comments on these proposed rules can be submitted through www.regulations.gov until September 17, 2025.
