03-12-2025

Restoring Public Service Loan Forgiveness

Executive OrderView the Original .pdf
View the Original .pdf

The 1-Minute Brief

What: Executive Order 14235 directs the Secretary of Education to revise the Public Service Loan Forgiveness (PSLF) Program, disqualifying employees of organizations deemed to have a "substantial illegal purpose."

Money: The order does not appropriate new funds. It aims to redirect how existing PSLF funds are used by preventing loan forgiveness for individuals at certain organizations, though specific costs or savings are not detailed.

Your Impact: If you are a federal student loan borrower working for a non-profit organization, your eligibility for loan forgiveness could be at risk if your employer's activities are determined to fall under the newly defined exclusionary criteria.

Status: This Executive Order was signed on March 7, 2025, and is scheduled to be published in the Federal Register on March 12, 2025.

What's Actually in the Bill

Executive Order 14235 mandates a change in the rules governing the Public Service Loan Forgiveness (PSLF) program. The goal is to prevent taxpayer money from subsidizing organizations that the administration asserts are involved in illegal activities or act against the national interest. The Secretary of Education is tasked with creating new regulations to define which employers are ineligible.

Core Provisions:

  • The definition of "public service" for the purpose of loan forgiveness will be revised to exclude organizations that engage in activities with a "substantial illegal purpose."
  • The order specifies several categories of activities that would disqualify an organization, including:
    • Aiding or abetting violations of federal immigration laws, such as 8 U.S.C. 1325.
    • Supporting terrorism, which includes funding cartels designated as Foreign Terrorist Organizations.
    • Involvement in child abuse, including trafficking children to "transgender sanctuary States."
    • A pattern of engaging in illegal discrimination.
    • A pattern of violating state tort laws like trespassing, vandalism, or obstruction of highways.

Stated Purpose (from the Sponsors):

The order states its purpose is to restore the original intent of the PSLF program, which it claims was abused by the previous administration through a waiver process.

  1. End the subsidization of activities deemed to be illegal, such as "illegal immigration, human smuggling, child trafficking, pervasive damage to public property, and disruption of the public order."
  2. Ensure the PSLF program does not misdirect tax dollars to "activist organizations that...harm our national security and American values."
  3. Correct "perverse incentives" that the order claims can increase tuition costs and load students with unsustainable debt in majors that are not in high demand.

Key Facts:

Affected Sectors: Non-profit organizations, Healthcare, Immigration advocacy, and other public service fields.
Timeline: The order directs the Secretary of Education to propose revisions to the program's regulations. A specific deadline is not provided, but the process of negotiated rulemaking is expected to lead to formal proposals that could take effect in 2026.
Scope: The order applies nationwide to any organization that would otherwise be a qualifying employer for the PSLF program.

The Backstory: How We Got Here

Timeline of Events:

The Beginning of PSLF (2007-2017):

The Public Service Loan Forgiveness (PSLF) program was established with bipartisan support in 2007 under the George W. Bush administration. It was created by the College Cost Reduction and Access Act to encourage graduates to enter public service jobs. The promise was straightforward: work full-time for a qualifying employer (a government entity or a 501(c)(3) non-profit) and make 120 qualifying monthly payments on your federal Direct Loans, and the remaining balance would be forgiven. The first borrowers became eligible for forgiveness in October 2017.

The "99% Denial Rate" Era (2017-2021):

When the first wave of applicants sought forgiveness, problems immediately surfaced. An astonishing 99% of the initial applications were denied. The reasons for denial were often highly technical, such as being in the wrong type of federal loan program or the wrong repayment plan. In response, Congress passed the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program in 2018, but it was also plagued by a high denial rate. These failures led to widespread frustration and lawsuits, with critics blaming both the program's complex design and poor implementation by loan servicers.

The Waiver Period (2021-2022):

In October 2021, the Biden administration announced a temporary waiver that significantly relaxed the PSLF rules. This waiver allowed borrowers to get credit for past payments that were previously ineligible, regardless of the loan type or repayment plan. This led to a dramatic increase in the number of borrowers receiving forgiveness, with over $6.2 billion in loans canceled for 100,000 people by March 2022. The Executive Order explicitly references this waiver process as an "abuse" that used taxpayer funds to pay off loans for employees who had not met the statutory requirements.

Why Now? The Political Calculus:

  • Change in Administration: The executive order represents a sharp reversal of the previous administration's approach to PSLF, reflecting a different philosophy on student loan forgiveness and the role of non-profit organizations.
  • Targeting "Activist Organizations": The order's language suggests a belief that the PSLF program has been exploited by non-profits engaged in political or social advocacy that the current administration opposes.
  • Connection to Broader Conservative Agendas: This action aligns with proposals from initiatives like Project 2025, which advocate for eliminating or severely curtailing student loan forgiveness programs, including PSLF.

Your Real-World Impact

The Direct Answer: This directly affects individuals with federal student loans who work, or plan to work, for non-profit organizations, particularly those involved in advocacy related to immigration, gender-affirming care, or other areas mentioned in the order.

What Could Change for You:

Potential Benefits:

  • Proponents argue the order will ensure that taxpayer-funded loan forgiveness is directed toward genuine public service, as they define it, and away from organizations with purposes they deem harmful.
  • It could prevent the use of federal funds to indirectly support activities that the administration considers illegal or against the public interest.

Possible Disruptions or Costs:

Short-term (1-2 years):

  • Uncertainty: Employees at non-profits may face uncertainty about whether their employer will remain eligible for PSLF, making career and financial planning difficult.
  • Job Changes: Some borrowers may feel compelled to leave their jobs for a government or "safer" non-profit position to ensure they remain on track for forgiveness.

Long-term:

  • Loss of Forgiveness: Employees at organizations ultimately deemed ineligible will lose their ability to receive PSLF, potentially adding tens or hundreds of thousands of dollars to their long-term debt burden.
  • Reduced Workforce for Some Non-Profits: Organizations disqualified from PSLF may struggle to recruit and retain qualified employees, as they can no longer offer this financial incentive.

Who's Most Affected:

Primary Groups: Employees of non-profits that work on issues such as immigration rights, services for transgender youth, and certain forms of protest or civil disobedience.
Secondary Groups: The broader non-profit sector, which may face increased scrutiny and administrative burdens. Students and graduates considering public service careers may be deterred.
Regional Impact: The impact could be greater in states with more "transgender sanctuary" laws or a higher concentration of immigration advocacy groups.

Bottom Line: If you work for a non-profit, your path to student loan forgiveness could be cut off if your employer's work is reclassified as having a "substantial illegal purpose" by the Department of Education.

Where the Parties Stand

Republican Position: "Restoring Integrity and Fiscal Responsibility"

Core Stance: The PSLF program has been misused and needs to be reformed to protect taxpayers and ensure it serves its intended purpose.

Their Arguments:

  • ✓ The program should not be a subsidy for "activist organizations" engaging in activities that are either illegal or run contrary to national security and American values.
  • ✓ The previous administration's waiver program was an overreach of authority and forgave loans for people who hadn't met the 10-year service requirement.
  • ✗ They generally oppose broad student loan forgiveness, viewing it as fiscally irresponsible and unfair to those who have paid off their loans.

Legislative Strategy: Use executive authority to reshape the program's implementation. This move is consistent with broader proposals to curtail or eliminate student loan forgiveness programs entirely, as seen in the Project 2025 agenda.

Democratic Position: "Protecting Public Servants"

Core Stance: This executive order is a politically motivated attack on public service workers and vital non-profit organizations.

Their Arguments:

  • ✓ The PSLF program is a critical tool for recruiting and retaining talent in essential but often lower-paying fields like teaching, nursing, and public interest law.
  • ⚠️ The waiver program was a necessary correction to fix years of program mismanagement and ensure promises made to public servants were kept.
  • ✗ The executive order gives the Secretary of Education broad, arbitrary power to disqualify employers based on their political leanings or mission, effectively punishing borrowers for their employers' actions.

Legislative Strategy: Oppose the implementation of these changes, support legal challenges, and advocate for expanding, rather than restricting, access to PSLF and other loan forgiveness programs.

Constitutional Check

The Verdict: ⚠️ Questionable

Basis of Authority:

The order is based on the President's authority to oversee the executive branch and implement laws passed by Congress.

U.S. Constitution, Article II, Section 1, Clause 1: "The executive Power shall be vested in a President of the United States of America."
U.S. Constitution, Article II, Section 3: "...he shall take Care that the Laws be faithfully executed..."

Constitutional Implications:

[Executive Discretion]: The administration argues it is exercising its discretion to interpret and implement the PSLF statute. The core question is whether this order is a "faithful execution" of the law or an attempt to rewrite it.
[Precedent]: Courts have previously struck down attempts by the Department of Education to arbitrarily change PSLF eligibility criteria. In 2019, a federal judge ruled that the Department's new criteria for eligible employment were "arbitrary and capricious."
[Separation of Powers]: Critics argue the order oversteps executive authority. Congress created the PSLF program and defined a qualifying employer. This order could be seen as an attempt by the executive branch to unilaterally amend the law by adding new, substantive conditions for eligibility that Congress did not intend.

Potential Legal Challenges:

Legal challenges are highly likely from advocacy groups and affected non-profit organizations. Lawsuits would likely argue that the order is an overreach of executive power, that the criteria are unconstitutionally vague, and that the new rules are arbitrary and capricious under the Administrative Procedure Act.

Your Action Options

TO SUPPORT THIS EXECUTIVE ORDER

5-Minute Actions:

  • Contact the Department of Education: Submit a public comment in support of the proposed rule changes once they are published in the Federal Register.
  • Call Your Rep/Senators: Capitol Switchboard: (202) 224-3121 "I'm a constituent from [Your City/Town] and I support Executive Order 14235 to reform the Public Service Loan Forgiveness program."

30-Minute Deep Dive:

  • Write a Detailed Email: Find contact information for members of the House Committee on Education and the Workforce and the Senate Committee on Health, Education, Labor, and Pensions to express your support.
  • Join an Organization: Look for conservative or fiscal policy organizations that advocate for reduced government spending and student loan reform.

TO OPPOSE THIS EXECUTIVE ORDER

5-Minute Actions:

  • Call Your Rep/Senators: [Capitol Switchboard: (202) 224-3121] "I'm a constituent from [Your City/Town] and I urge [Rep./Sen. Name] to oppose Executive Order 14235 and protect the Public Service Loan Forgiveness program."

30-Minute Deep Dive:

  • Write a Letter to the Editor: Submit a letter to your local newspaper explaining the importance of the PSLF program for your community and the potential negative impacts of this order.
  • Join an Organization: Groups like the Student Borrower Protection Center, the American Federation of Teachers, or the National Education Association are actively opposing these changes.