Trump’s Executive Order on Public Service Loan Forgiveness: Who Loses, What It Means, and What Borrowers Should Do Now

President Donald Trump has signed an executive order restricting access to Public Service Loan Forgiveness, excluding employees at certain nonprofit organizations from loan relief. This move shifts PSLF’s eligibility criteria and could impact thousands of borrowers working in immigration, civil rights, and other nonprofit sectors.

Here’s what happened, who’s affected, and what borrowers need to know.

Related: Will Trump End Public Service Loan Forgiveness?

Previously, PSLF forgave federal student loans for borrowers who made 120 qualifying payments while working in government or nonprofit organizations, including many 501(c)(3) charities and some non-501(c)(3) nonprofits that provide public services.

Trump’s executive order redefines “public service” to exclude organizations engaged in activities deemed to have a “substantial illegal purpose.” The order specifically mentions nonprofits involved in:

• Immigration and refugee assistance that may violate federal immigration laws

• Civil rights and legal aid organizations accused of aiding illegal discrimination

• Nonprofits supporting transgender youth and gender-affirming care

• Groups involved in public protests or political activism

The order states that PSLF should be refocused on “essential public service roles” like healthcare and education, rather than organizations involved in activism or politically sensitive issues.

These changes could strip PSLF eligibility from employees of organizations engaged in legal aid, refugee resettlement, and civil rights work.

Presidents cannot unilaterally change federal law, including PSLF, with an executive order. PSLF is codified in 20 U.S.C. § 1087e(m) of the Higher Education Act, which explicitly defines which workers qualify for loan forgiveness after a decade of public service.

Under § 1087e(m)(3)(B), qualifying jobs include:

• Government positions

• Military service

• Public health

• Public education

• Social work

• Legal aid for low-income communities

• Employment at a 501(c)(3) nonprofit

The statute itself protects 501(c)(3) employees, meaning the order cannot exclude them from PSLF without congressional action.

Related: Is PSLF Guaranteed?

PSLF is written into federal law but the Department of Education has historically defined eligibility beyond what Congress explicitly wrote. Specifically, 34 CFR 685.219 expanded PSLF to include some non-501(c)(3) nonprofits that provide “public service.”
This includes organizations such as:

• Legal aid groups (nonprofit but not necessarily 501(c)(3))

• Refugee and immigration services

• Other non-501(c)(3) nonprofits that meet “public service” criteria

Because this expanded eligibility was created through regulation rather than statute, Trump can use executive authority to order the Education Department to reinterpret these regulations, restricting PSLF eligibility without congressional approval.

If Trump’s executive order is challenged, courts will likely weigh it against recent rulings on agency authority and regulatory changes. Here’s how the legal arguments could play out:

Why This Order May Have Legal Standing

• The PSLF statute explicitly protects 501(c)(3) nonprofit employees, but it does not mention non-501(c)(3) nonprofits.

• The Education Department expanded eligibility through regulation—which can be reinterpreted by a new administration.

• The Supreme Court has recently restricted agency power when Congress has not explicitly authorized policies (West Virginia v. EPA, Biden v. Nebraska).

• Trump’s order follows this trend, arguing that if Congress did not explicitly include certain nonprofits, they should not qualify.

How Borrowers Might Challenge the Order

• Administrative Procedure Act (APA): Borrowers could argue the rule change is “arbitrary and capricious” if the Education Department cannot justify the exclusion of certain nonprofit workers.

• Reliance Interests & Due Process: Borrowers who planned their careers around PSLF could argue they have a property interest in loan forgiveness that cannot be revoked without due process.

• Equal Protection Claims: If the exclusions disproportionately target specific nonprofit missions (e.g., immigration, LGBTQ+ advocacy), lawsuits could argue it is politically motivated.

Borrowers have sued the Education Department before over retroactive PSLF changes. Back in 2016, the American Bar Association sued the department for retroactively denying PSLF eligibility to public interest lawyers. The court ruled that agencies cannot arbitrarily change eligibility without justification. That case could be a factor in how future courts assess challenges to Trump’s order.

The full impact depends on how the Department of Education implements the order, BUT borrowers in the following roles may be affected:

✅ Still Eligible for PSLF

• Government employees (federal, state, local, tribal)

• Military service members

• Public school teachers

• Public health and law enforcement workers

• Employees of 501(c)(3) nonprofits not involved in restricted activities

❌ At Risk of Losing PSLF

• Lawyers providing legal aid for immigrants and asylum seekers

• Employees of immigration and refugee nonprofits

• Workers at civil rights organizations engaged in legal challenges

• Nonprofit staff assisting LGBTQ+ youth with medical care

• Activists working for protest-related organizations

If your PSLF eligibility depends on employment at a nonprofit that could be affected, you may need to take action before regulations take effect.

No, PSLF is not ending entirely—but this order narrows who qualifies. Trump cannot eliminate PSLF without Congress, but he can change how it is enforced through executive action and regulatory interpretation.

Historically, the Department of Education has broadened PSLF eligibility through rulemaking (e.g., the Biden administration’s PSLF waiver). Trump’s order does the opposite: narrowing PSLF access without changing the law itself.

The fact sheet also criticizes the Biden administration’s PSLF expansions, claiming they forgave loans improperly. While this order does not reverse those changes, it signals that further PSLF restrictions could be coming.

If you’re worried about losing PSLF eligibility, here are steps to protect yourself:

• Certify Your Employment Immediately: If your nonprofit is at risk, submit an employer certification form now to lock in eligibility before new rules take effect.

• Track Legal Challenges: If lawsuits are filed, courts may block the order’s implementation. Follow updates from student loan advocacy groups.

• Watch for Further Changes: If Trump continues making PSLF changes, affected borrowers may need to explore alternative forgiveness options. There have also been discussions in Congress about removing nonprofit status for hospitals, which could impact PSLF eligibility for healthcare workers in nonprofit systems. While this is not part of the executive order, it’s something to monito

Trump’s executive order does not eliminate PSLF, but it removes eligibility for certain nonprofit workers—especially those in immigration, civil rights, and protest-related work. Legal challenges are expected, and borrowers should act quickly to secure their status.

If you’re uncertain about your PSLF eligibility, now is the time to take action. Get your employment certified, stay informed, and be prepared for legal battles ahead.