"The Trump administration is pushing forward changes to the Public Service Loan Forgiveness (PSLF) program that could destabilize nonprofits by injecting political control in what was meant to be an incentive for Americans to dedicate themselves to public service. The proposed rule...follows President Donald Trump's March 7 executive order claiming PSLF had been misdirecting tax dollars to "activist organizations" that "harm our national security and American values.""
"On August 18, the US Department of Education published a proposed rule to give the secretary of education the power to decide if an employer has engaged in "substantial illegal activities" and strip them of PSLF eligibility. The broad definitions of the allegedly illegal activities could be used against organizations working on immigration, gender-affirming care, LGBTQIA+ issues, reproductive health, civil rights, advocacy through protest, and more."
"Created by Congress in 2007 with bipartisan support, PSLF forgives the remaining balance of certain federal direct student loans for people who work in public sector jobs. Qualifications are stringent, including that borrowers first need to make 120 qualified monthly loan repayments while working full-time for eligible employers, such as local and state governments, 501c3 organizations, and some other nonprofits."
Proposed changes to the Public Service Loan Forgiveness program would give the Education Secretary authority to declare employers ineligible for PSLF if they engaged in "substantial illegal activities," potentially stripping employees of loan forgiveness. PSLF, enacted in 2007, requires 120 qualified monthly payments while working full-time for eligible employers such as local and state governments, 501c3s, and certain nonprofits. The Department of Education's broad definitions of illegal activity could encompass immigration work, gender-affirming care, LGBTQIA+ issues, reproductive health, civil rights, and protest advocacy, risking politicization and financial instability for nonprofits. The rule is slated to take effect July 1, 2026, and could limit borrower appeals.
Read at Non Profit News | Nonprofit Quarterly
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