A pair of federal judges on Tuesday struck down a Trump administration rule that would have denied student loan forgiveness to public service workers employed by activist organisations accused of pursuing an “illegal purpose.”
The judges ruled on June 30 in separate cases brought by advocates who argued that the changes risked turning the program into “a way of silencing local governments and nonprofit organizations that do work that goes against the administration’s political agenda.”
U.S. District Judge Myong Joun in Massachusetts vacated the Department of Education’s changes, saying it threatened a “substantial amount of protected speech.”
The decision came in response to two lawsuits filed by a coalition of 22 states and the District of Columbia, led by the National Council of Nonprofits.
In the District of Columbia, District Judge Amir Ali issued a similar ruling in a case brought by nonprofit organizations, led by the Robert F. Kennedy Center for Justice and Human Rights.
The rulings came a day before the new rules were set to take effect on July 1.
Congress created Public Service Loan Forgiveness in 2007 to encourage college graduates to work in government and nonprofit jobs. It promised to forgive their federal student loans after they worked in public service jobs for 10 years.
In March 2025, the Trump administration moved to add new eligibility rules that would strip the benefit from individuals employed by organizations whose activities were deemed to have a “substantial illegal purpose.”
It gave the education secretary authority to exclude organisations accused of facilitating illegal immigration, supporting terrorist groups, trafficking children, or providing puberty blockers and hormones to minors, procedures the administration described as “chemical castration.”
The department estimated that restricting ineligible employers would save taxpayers about $1.6 billion over 10 years, although it expected fewer than 10 organizations per year to be disqualified.
In December 2025, Education and Workforce Committee Chairman and Rep. Tim Walberg (R-Mich.) said that the Public Service Loan Forgiveness (PSLF) “was intended to help meet workforce needs for employers who serve the public good.”
“Unfortunately, the open-ended nature of PSLF has forced taxpayers—many of whom never went to college, to foot the bill for employees at radical organizations that violate state and federal laws,” he said.
“Aiding illegal immigration, supporting terrorism, or promoting child abuse through gender transitions is not ‘public service.'”
Diane Yentel, president and CEO of the National Council of Nonprofits, one of the plaintiffs in the Massachusetts case, said, “This decision is a win for the communities that depend on local nonprofits and for the workers who serve them.”
One of the plaintiffs in the Massachusetts case, Adam Ryan Chang, executive director of Oasis Legal Services, said that his organization represented “more than 1,000 LGBTQ+ immigrants fleeing persecution and navigating government-created processing delays.”
“Their cases require experienced counsel to prevent unwarranted detention or deportation. When the federal administration attempts to dismantle PSLF, it drives skilled advocates out of public service,” he said.
Another plaintiff, American Federation of Teachers President Randi Weingarten, one of the most powerful teachers union bosses in the country, said that the “ruling shows that imposing an ideological litmus test on millions of public servants and their employers is antithetical to American values and contrary to the statute at hand.”
Undersecretary of Education Nicholas Kent said the department is evaluating next steps for its “commonsense policy.”
“The Public Service Loan Forgiveness Program is intended to support Americans who serve the public good, not to subsidize organizations that engage in terrorism, facilitate illegal immigration, or support the mutilation of children,” he said.
