Federal Government to Bar Employers Engaged in Illegal Activities From Loan Relief Program

The Education Department said the new rules restore the taxpayer-funded program to its original purpose of supporting public workers.

Under new rules, organizations that otherwise meet the Public Service Loan Forgiveness program's government or nonprofit requirements could lose their qualifying status if the Education Department determines that they engage in activities that have a "substantial illegal purpose." Shutterstock

The U.S. Department of Education said on Oct. 30 that it has finalized new rules for a student loan forgiveness program to exclude public service organizations that the department says engage in unlawful activities, such as aiding illegal immigration or performing transgender-related medical procedures on minors.

The final rule tightens eligibility criteria for employers participating in the Public Service Loan Forgiveness (PSLF) program, which discharges the remaining federal student loan balance for borrowers who make 10 years of qualifying payments while working full time in public service, such as for government agencies or qualified nonprofit organizations.