WASHINGTON (AP) — The Trump administration is moving forward with plans to eject certain nonprofits from a key student loan forgiveness program, impacting teachers, doctors, and public workers across various fields. New regulations finalized last Thursday give the Education Department expanded authority to exclude organizations from the Public Service Loan Forgiveness program if they are determined to have a 'substantial illegal purpose.'
Coming into effect in July, the policy primarily targets organizations supporting immigrants and transgender youth. It empowers the education secretary to exclude groups for activities such as child trafficking or 'chemical castration' — a term referring to gender-affirming care commonly used for transgender minors.
The changes mark a significant overhaul of a program that has cancelled federal student loans for over a million public service workers since its inception in 2007. The administration argues this policy is necessary to prevent taxpayer funds from supporting organizations that violate the law, although critics view it as a political tool.
The Public Service Loan Forgiveness program has historically included government employees, teachers, and nonprofit workers and rewards them after 10 years of repayments. The Trump administration's moves could lead to fewer than 10 organizations being expelled annually. However, concerns have risen due to the vague criteria surrounding what constitutes a 'substantial illegal purpose.'
Employers can be barred if they lose a court case or agree to a settlement admitting guilt. This could mean that providing gender-affirming care in states where it is outlawed might be grounds for exclusion. The education secretary's broad discretion raises concerns about potential ideological bias in these decisions.
Opponents, including major associations in education and healthcare, argue that this initiative undermines vital public services and promotes political overreach. They emphasize that the new rules could threaten public defenders and lawyers focused on public interest, ultimately reducing access to legal representation for many.
The new regulations stipulate that any actions occurring on or after July 1, 2026 can lead to sanctions, allowing organizations a chance to respond before being expelled. However, critics fear that even a single violation could result in ejection based on the secretary's interpretation of the situation, potentially influencing which organizations qualify for assistance based on shifting political landscapes.
