The Donald Trump administration published a regulation proposal this week that seeks to limit what employees of the public sector can obtain the condonation of their student loans, this being one of several recent measures of the former president to restrict debt condonation, after their significant expansion under the Biden administration.
Key data
- The Department of Education published new rules on the Federal Register on Monday that restricted certain employers to participate in the Loan for Public Service Condonation Program (PSLF) if they are dedicated to “illegal activities”, after an executive order signed by Trump in March that points to the program.
- The regulations propose to disqualify employers who would otherwise qualify for the PSLF for reasons such as promoting medical care of gender statement for minors or committing acts of violence with the purpose of influencing government policies, which has generated concern among critics that fear that it will be used to punish progressive organizations, local governments of “sanctuary cities” or groups that promote left -wing policies.
- The borrowers who described for the condonation under the income -based payment plans (IBR) are also in a kind of limbo, since the Trump administration paused that modality of condemnation at the beginning of summer, although he said that it is a temporary measure.
- Other payment plans that were already in pause on judicial orders include Saving on a Valuable Education (Save), Pay As You Earn (Paye) and incom-contingent repayment (ICR). However, the Democrats have questioned the need to pause the IBR, since it was not directly affected by judicial failures.
- The reconciliation bill that Trump signed in July, called his “Big Beautiful Bill”, also introduces changes to the condonation system as part of a broader reform of the payment process and assignment of student loans.
What changes could be made to the Loan for Public Service (PSLF) program?
The rules published on Monday in the Federal Register (Federal Registry) disqualify employers who would otherwise be eligible for the PSLF, if the administration determines that its activities have a “substantial illegal purpose.”
The PSLF program allows the borrowers to obtain the condonation of their loans more quickly if they work in public service occupations, which includes non -profit organizations, governments and other public institutions.
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The specific categories of “illegal” activities mentioned by the new federal rules include:
- “Assist or cover up crimes” against the United States.
- “Chemical or surgical mutilation” of minors (referring to gender affirmation attention) in states where this attention is prohibited by law.
- Be or support a “foreign terrorist organization.”
- Commit “illegal discrimination.”
- Violate federal migratory laws.
- “Traffic” of minors in order to emancipate them from their tutors.
- Exercise violence with the purpose of obstructing or influencing federal policy.
The broad nature of these definitions has generated concern, since they could be used to exclude focused progressive organizations, for example, in trans people rights or support for undocumented immigrants.
The Institute for College Access and Success warned that the White House could also deny the condom to government employees who work in “Sanctuary cities” or even in universities that the Trump administration has criticized for promoting diversity and inclusion initiatives.
The rules would give the Secretary of Education – a designated by Trump – broad discretion to determine which employers are acting “illegally” and, therefore, must be excluded from the PSLF.
How would the changes affect the borrowers?
Changes to the PSLF program have not yet been completed. The publication in the Federal Register On Monday, a period of 30 -day public comments began, which will end on September 17, during which anyone can send their opinion about the new policy.
If the proposal is approved, it will enter into force on July 1, 2026. From that date, the Secretary of Education could:
- Disqualify current employers who participate in the PSLF program.
- Determine that new organizations that request to participate are not eligible due to activities considered “illegal”.
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Disqualified employers may appeal their exclusion and re -enter the program if the secretary approves a “corrective action plan” that aligns their activities with federal policy. They could also be eligible to rejoin the PSLF 10 years after having been disqualified.
However, the rules do not give employees any way to challenge the disqualification of their employer. This means that workers would have to change their jobs and look for another employer who does qualify for the PSLF if they want to continue accumulating valid payments for the condonation.
In addition, the new rules indicate that only payments made before July 1, 2026 will be counted. Any payment made after that date while working for a disqualified employer will not count for the condonation.
These new rules will probably face legal challenges, so it is possible that the changes are temporarily or permanently blocked by the courts.
When will the condom resume under the income -based payment plan (IBR)?
The Trump administration announced at the end of July that the conded loans under the IBR Plan had been temporarily paused, after several borrowers had already reported delays in the condonation process.
Currently, it is not clear when they will resume.
IBR plans are one of several payment options based on the revenue of the borrower, and is the main plan that was not directly affected by recent judicial failures that have blocked other payment programs under the Biden administration.
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Ellen Kaast, deputy press secretary of the Department of Education, told Forbes on Wednesday that the condonation under IBR was paused because a judicial sentence that affects other payment plans also impacts the calculation of the amounts that can be condemned under the IBR.
Said that:
“The cancellations under IBR will resume as soon as the department can establish the correct payment count.”
Senator Bernie Sanders (independent of Vermont) and other Democratic senators sent a letter to the Secretary of Education Linda McMahon on Monday requesting more information about the pause, and argued that the lack of clarity on how long the suspension will last is “alarming, considering that many borrowers have been waiting for relief for months.”
Kaesta also pointed out that the borrowers who become eligible for foroning while the program is leisurely, and continue to pay payments, will receive a reimbursement for payments that exceed the necessary amount.
Other student loans forcononation programs – including Save, Paye and ICR – are also in pause
The decision of the Trump administration of Pausar the IBR Plan occurs in a context where the borrowers have already been excluded from the foronation under other payment plans, such as:
- SAVE (Saving on a Valuable Education)
- PAYE (Pay As You Earn)
- ICR (Income-Contingent Repayment)
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This happened after a Federal Court issued in February a sentence against the Save Plan and also blocked debt for these other revenue -centered plans.
That litigation follows its course in court, so it is possible that the status of these programs change again in the future.
Other programs are also judicially frozen that allow borrowers to cancel their loans if:
- Your university closed, or
- They were victims of fraud by the educational institution.
The Supreme Court will hear that case during its next judicial period and is expected to issue a decision for June 2026.
Meanwhile, the Department of Education is not processing formed requests under these programs.
How does the law ‘Big Beautiful Bill’ of Trump impact the forgiveness of student loans?
The expenditure bill, nicknamed by Trump as his “Big Beautiful Bill”, completely reformed the process of paying student loans, eliminating current revenue -based plans and forcing new borrowers to choose between two options:
- A fixed payment plan, which divides the loan into equal monthly installments.
- A new “Reimbursement Assistance Plan” (RAP), which calculates payments according to the revenue of the borrower.
Under this new law:
- The borrowers who register in the RAP Plan must make payments for 30 years before the rest of their loans are conded.
- This represents an increase with respect to the 20 or 25 years required under current plans.
- The fastest condonation under the PSLF program (after 10 years) will remain available.
This article was originally published by Forbes US
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