The Trump administration has walked away from its fight over the PSLF rule that would have let Washington disqualify employers from Public Service Loan Forgiveness. On October 21, 2026, the Justice Department moved to dismiss two appeals defending the rule, months after federal judges blocked it in June. The administration offered no explanation for the retreat.
Read the full report from Inside Higher Ed.
What the administration gave up
The rule, finalized in October 2025, would have handed Education Secretary Linda McMahon the power to cut off certain organizations — and the people who work for them — from Public Service Loan Forgiveness. The idea originated in an executive order in which President Donald Trump called on the Education Department to limit access to the program. In practice, it would have turned a debt-relief program for teachers, nurses, and public-interest lawyers into a lever against employers the administration accused of unlawful conduct.
Why the courts blocked it
Two federal district judges blocked the rule in June 2026. The administration appealed both rulings — then quit. The plaintiffs, companies represented by the legal advocacy group Student Defense, argued the rule was arbitrary and capricious, exceeded executive authority, and violated the First Amendment. The administration countered that the companies lacked standing to sue at all. After more than a year of regulatory maneuvering, the government’s own lawyers chose dismissal over another round in court. “We always believed that we had a strong case and that the rule was illegal from the outset,” Student Defense said of the dismissal.
Who this affects
Anyone counting on Public Service Loan Forgiveness — the program that cancels remaining federal student loan debt after 120 qualifying payments while working full-time for a government or nonprofit employer. Had the PSLF rule survived, borrowers at disfavored nonprofits could have watched years of qualifying payments evaporate. For now, as one of the plaintiffs’ attorneys put it, the limitations on PSLF are dead, and payments keep counting under the existing eligibility rules.
What to watch next
The fight is not formally over. A third appeal is still pending in the First Circuit Court of Appeals, though legal experts expect it to be dropped as well. And nothing stops the administration from proposing an amended, narrower version of the rule later — officials have used the same playbook before, advancing contested policies with the Justice Department and revising them after court losses. Borrowers should keep certifying their employment and tracking qualifying payments as usual.
Frequently asked questions
Is Public Service Loan Forgiveness still available?
Yes. With the PSLF rule blocked and the appeals dismissed, the program continues under its existing rules: 120 qualifying monthly payments while employed full-time by a qualifying government or nonprofit employer.
Could the administration try again?
Possibly. Officials could propose a revised version of the rule. But the current rule is dead, and the courts have twice rejected it.
