By Eliza Haverstock, NerdWallet
On Mar. 7, President Donald Trump signed an executive order that seeks to limit who can qualify for Public Service Loan Forgiveness (PSLF). It directs the Education Secretary to write a proposal removing PSLF eligibility for borrowers who work for organizations serving “a substantial illegal purpose.”
Despite the order’s strong language, at this point, no borrowers are at imminent risk of losing their eligibility for PSLF. The program forgives a borrower’s federal student loans after they make 10 year’s worth of payments while working in public service — as teachers, firefighters, police officers, healthcare workers, government workers and other nonprofit employees.
“You’re right to freak out, but if you take a beat and dig into what the executive order says right now, it’s just a directive to change the language [of PSLF] in the future,” says Stanley Tate, a lawyer who specializes in student debt. “How that actually plays out is yet to be written. When it does, there will surely be a response from different advocacy groups that are interested in protecting borrowers moving forward.”
Still, there are steps PSLF-eligible borrowers can take now to prepare for uncertainty, starting with understanding what the executive order does, which borrowers it targets and how to track your own PSLF progress.
» MORE: How the Trump presidency could affect student loan borrowers
What does the PSLF Executive Order do?
The executive order directs Education Department Secretary Linda McMahon to create a proposal limiting PSLF eligibility. In a Mar. 10 post on social media network X, the Education Department wrote, “the PSLF Program is not changing today, and borrowers do not need to take any action.”
On Mar. 12, an Education Department spokesperson said in an email, “President Trump’s executive order will restore the PSLF program to its statutory basis and not allow PSLF to fund anti-American activists. The executive order is narrow in its purpose to ensure certain nonprofits do not inappropriately qualify for PSLF, but does not direct other changes to the program. The Department is reviewing the executive order and will ensure the program is managed effectively for those it is intended to serve.”
However, Tate says he doubts the order, as written, can be legally implemented. PSLF is established by law and cannot be unilaterally altered by the president; Congress would need to vote on any changes. The program has garnered bipartisan support since 2007, when former president George W. Bush, a Republican, signed it into law.
Trump’s executive order “directs the Education Department to find ways to modify the language in order to not enable these organizations that participate in this category of things,” Tate says. “But how do you do that in practice, what type of evidence are you looking for? I think it’s just going to lead to litigation and ultimately nowhere.”
» MORE: With the Education Department under threat, here’s what student loan borrowers can do
Which public service jobs are targeted?
The PSLF executive order doesn’t specify which nonprofit organizations are at risk. Instead, it calls out broad sectors or activities that the Trump administration has repeatedly targeted: immigration and refugee assistance, support for transgender youth and gender-affirming care, and groups championing diversity and inclusion. It also wants to exclude nonprofits that are involved in protests or “supporting terrorism.”
However, the 2007 law that created PSLF does not allow the government to choose which nonprofit organizations are included in the program. It defines eligible borrowers as those who work in fields such as law enforcement, education or social services, and those who work for nonprofits with 501(c)(3) status, which is a specific type of nonprofit that is exempt from federal income tax. Labor unions and partisan political groups were never eligible for PSLF.
Tate says he doesn’t see how Trump’s order could impact employees of the government or 501(c)(3) organizations, because they are expressly written into the original PSLF statute. Congress would have to act to alter that language.
However, the Education Department has interpreted the PSLF statute to expand eligibility to certain non-501(c)(3) organizations that provide a public service. Employers of these non-501(c)(3) organizations could face higher risk, Tate says. That may include some groups that provide legal aid or immigration assistance.
What might happen next?
Student borrower advocacy groups will likely challenge the executive order with lawsuits. For example, American Federation of Teachers president Randi Weingarten said in a Mar. 7 statement, “the AFT won’t stop fighting, in court and in Congress, until every single public service worker gets the help the law affords them.”
Daniel Collier, assistant professor of higher and adult education at the University of Memphis who studies the impact of PSLF on borrowers, says he doubts the order will hold up in court.
However, this action could broadly discourage individuals from exercising their free speech for fear of losing their PSLF eligibility, and it could harm certain nonprofits’ ability to recruit employees, Collier says.
The Trump administration could also hamstring PSLF outside of this executive order. For example, Collier says he’s concerned the Education Department could mismanage PSLF by failing to process forgiveness for borrowers or by miscounting payments.
At one point during Trump’s first term in office, 99% of PSLF applications were denied, according to a 2019 review by the Government Accountability Office. Only 7,000 people had received PSLF by the time Trump left office in 2020. The Biden administration made it easier to qualify for PSLF, resulting in $78.5 billion worth of student loan forgiveness for over 1 million public servants.
» NEWS: Unpacking Trump’s executive orders
What should PSLF-eligible borrowers do right now?
At this point, don’t make financial or career moves based on this executive order.
“I just can’t stress enough, please don’t make decisions based on, understandably, a heightened emotional time,” says Kristen Ahlenius, a certified financial professional with PSLF expertise and director of advice at Your Money Line, a corporate financial wellness company. “Make sure you understand the reality of the situation that you’re in before you decide to abandon a program that can still be so, so, so beneficial.”
We still don’t know which actions the department will take as a result of this order. In this period of uncertainty, borrowers can take these steps now:
- Download your full repayment history from studentaid.gov and your federal student loan servicer account.
- Update your PSLF employment certification forms, using the PSLF Help Tool.
- Download your PSLF payment counts and summary from your studentaid.gov account.
- Check which months of your repayment history qualify for PSLF, and check for any errors. If the Education Department doesn’t resolve the errors, consider filing a student loan complaint.
Collier urges borrowers to be proactive: “Download everything. Keep every receipt. You make a payment, you log it with the proper paperwork,” he says.
PSLF uncertainty can weigh on student loan borrowers’ mental health, too, says Collier. Get help if you need it.
“We’re going to start seeing a lot of downstream effects on individuals’ mental health and how they behave and how productive they are,” Collier says. “Please make sure to protect yourself and find the help that you need to navigate these times.”
» LEARN: How did the PSLF transfer from MOHELA to the Education Department affect borrowers?
Eliza Haverstock writes for NerdWallet. Email: ehaverstock@nerdwallet.com. Twitter: @elizahaverstock.
The article Is Public Service Loan Forgiveness Going Away? Understanding Trump’s Executive Order originally appeared on NerdWallet.
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