Rule Limiting PSLF Beneficiaries Dead for Now

After more than a year of regulatory maneuvering and court battles, the Trump administration appears to be backing down from its efforts to limit access to the Public Service Loan Forgiveness program.

A rule finalized in October 2025 would have granted Education Secretary Linda McMahon the power to block certain companies and their employees from participating in PSLF if they conducted what the government considers “illegal” activities, like aiding undocumented immigrants and providing gender-affirming care. But it never took effect after two federal district judges blocked the rule in June.

The Trump administration appealed both rulings in circuit courts, but moved Wednesday to dismiss the appeals. The Department of Justice, which represented the Education Department in court, did not explain why.

Legal advocacy groups like Student Defense, which represented one of the plaintiffs, called the dismissal a “significant victory for millions of Americans.”

“We always believed that we had a strong case and that the rule was illegal from the outset,” the group’s chief counsel, Dan Zibel, told Inside Higher Ed. And while it’s speculation, “my sense is that the longer the Trump administration looked at it, the more they realized they weren’t going to get a different result on appeal.”

The plaintiff companies made it clear in court that none of their activities violated federal or state law and argued that the rule was arbitrary and capricious, exceeded executive authority, and violated the First Amendment. Meanwhile, the administration argued that the plaintiffs lacked standing to challenge the rule. If it was true that the companies hadn’t violated federal law, then their allegations “rest[ed] on speculative fears of future enforcement and unreasonable misinterpretations,” the government said. When the policy was first introduced, department officials said it was necessary to deter unlawful conduct and protect taxpayer dollars.

A third appeal is still pending in the First Circuit Court of Appeals, but legal experts expect it to be dropped as well.

Trump officials could still attempt to limit PSLF access by proposing an amended version of the rule within ED or another agency—a tactic they’ve used before. For example, the Education Department used the strategy in partnership with the DOJ in 2025 to advance its anti-DEI guidance, which had been blocked in court.

The administration has proposed a rule threatening the tax-exempt status of colleges and universities if they have race-based policies, and some observers have questioned whether the Internal Revenue Service would also try to target nonprofits that officials suspect are engaging in “illegal activities.” And during the first Trump administration, the Education Department initially denied loan forgiveness for the vast majority of borrowers, arguing they weren’t eligible for the PSLF program.

But for now, Zibel stressed, the limitations on PSLF are dead.

“It’s fair to say that the administration has taken any number of illegal actions, and when they’ve been stopped by a court, they try to accomplish the goal another way, but I haven’t heard of them trying yet,” he said. “What I do know is that we will be watching to make sure that PSLF remains in place and remains functional.”