A federal judge in Boston on Tuesday blocked the Trump administration from implementing a new rule that would strip public service workers of eligibility for federal student loan forgiveness if the government deems their employers to have a “substantial illegal purpose”.
Judge sides with Democratic-led states and non-profits
US district judge Myong Joun sided with Democratic-led states, cities and non-profits that argued the US Department of Education’s rule would allow it to target groups supporting immigration rights, transgender healthcare and other causes the Trump administration disfavors, by disqualifying them from the Public Service Loan Forgiveness Program.
The Public Service Loan Forgiveness Program allows borrowers to have their federal student loans forgiven after 10 years working for government or non-profit employers. More than a million borrowers have received debt relief since Congress established it in 2007.
Background of the rule
Donald Trump in a March 2025 executive order claimed the program had “misdirected tax dollars into activist organizations that not only fail to serve the public interest, but actually harm our national security and American values”. The order directed the education department to revise regulations to redefine what constitutes “public service” work, excluding organizations that engage in activities with a “substantial illegal purpose”.
The education department published a final rule in October defining “substantial illegal purpose” to include aiding illegal immigration, supporting terrorism, engaging in illegal discrimination, or participating in the “chemical and surgical castration or mutilation of children” – language often used by the administration when referring to gender-affirming care for transgender minors.
Lawsuit and ruling
The plaintiffs sued in November to block the rule from taking effect on 1 July, arguing it was designed to target causes the administration disfavors, such as immigrants’ rights, transgender healthcare, diversity initiatives and political protest. Their lawsuit claimed the law that created the forgiveness program did not grant the education department discretion to create exceptions to eligibility, and that the agency lacked a rational basis for adopting the policy.
Tuesday’s ruling marked the second legal defeat for the Trump administration’s efforts to remake the federal student loan system in the last week. On Wednesday, another judge in Washington DC barred the education department from implementing a new rule that would impose lower federal student loan limits for people pursuing graduate degrees in nursing and other healthcare-related fields.
