In a move regarded by many as an affront to a significant portion of U.S. students with federal loans, former President Donald Trump initiated an executive action that restricts certain borrowers from partaking in the Public Service Loan Forgiveness program (PSLF). This directive blatantly stipulates that ‘those serving organizations suspected of engaging in substantial illegal activities’ will be barred from accessing the program. This directive arrived just three weeks post Linda McMahon’s Senate confirmation hearing, where she vehemently committed to preserving PSLF in its entirety. As part of her duties, McMahon was instructed to redefine ‘public service’ in a way that would disqualify organizations tied to substantial illegal activities.
PSLF, a federal aid program, was conceived by Congress to help borrowers employed in public sector jobs, including those at nonprofit organizations. By faithfully making loan payments for a decade while servicing under eligible employers, these borrowers could see their federal loan balances written off. The new executive action however, seeks to reclassify which organizations can truly be considered to provide ‘public service’. The disqualifying activities feeding into this decision, include promoting terrorism, child maltreatment – including ‘chemical and surgical mutilation or trafficking of children under the guise of transgender sanctuary’, propagating illegal discrimination, and violations of both federal immigration laws and state laws associated with trespassing, disorderly behavior, public disturbance, vandalism, and highway obstruction.
Many have challenged the directive, arguing that it serves as a covert assault on the free speech rights of borrowers, as well as on organizations whose activities clash with the government’s established policies. They contend that this approach effectively leverages debt to bully public service workers away from safeguarding society’s vulnerable or voicing opposition to the Trump administration’s radical strategies. These fears are backed by Persis Yu, the Student Borrower Protection Center’s deputy executive director and managing counsel, who observes the manipulative role this policy is allowing debt to play.
The PSLF legislation, enacted by ex-President George W. Bush in 2007, clearly defines which public service entities qualify for the scheme. Yu, however, argues that the present administration would have to undergo a grueling federal rule-making process to officially revise these qualification guidelines. In the same vein, while McMahon and the White House might be able to implant fresh regulations into the legislation, the redefinition of the law and its qualifying candidates cannot be achieved solely through an executive directive.
To illustrate, the Biden administration took a decidedly different approach in 2021, broadening the scope of PSLF in a move that some skeptics construed as a gimmick to win favor. This decision sparked an apparent surge in loan forgiveness. In a statement issued at the twilight of Biden’s term, it was disclosed that an astounding ‘total number of borrowers approved for PSLF now stands at 1,069,000, with the forgiven amount totaling $78.46 billion. In stark contrast, only 7,000 borrowers were granted PSLF at the onset of the Biden-Harris reign.’
The executive order enacted by Trump generated more than its share of controversy, with critics like Yu stating that the president fell short of the authority needed to redefine the law, nor decide who may be eligible for it. ‘These borrowers have essentially entered into a contract with the Department of Education that encompasses their right to public service loan forgiveness,’ argues Yu, while forecasting an imminent influx of legal challenges against the executive directive.
PSLF, as a program, has always been mired in issues – a troubling fact that does little to assuage concerns about this ill-conceived executive action. A 2018 review conducted by the U.S. Government Accountability Office identified a glaring gap in the operation of the program. These preliminary findings suggested that some borrowers were kept in the dark about their job’s eligibility for PSLF, as the Education Department had failed to provide the managing company with a comprehensive list of eligible employers.
Moreover, the same year bore witness to a shocking revelation that 99% of applications submitted for loan forgiveness through PSLF were flat out rejected. This distressing statistic underscores the dire need for improvements within the system, instead of instigating more obfuscated policies that pander more to rhetoric than real progress. This executive action demonstrates not so subtlety that the Trump administration was more concerned with appeasing their agenda than genuinely improving the lives of indebted public service workers.