A federal judge in Boston on Tuesday blocked the Trump administration from enforcing a new rule that would strip public service workers of eligibility for federal student loan forgiveness if their employers are deemed to have a 'substantial illegal purpose.'
Judge Sides with Democratic-Led States and Non-Profits
U.S. District Judge Myong Joun sided with Democratic-led states, cities, and non-profits that argued the U.S. Department of Education's rule would allow it to target groups supporting causes the administration disfavors, such as immigration rights and transgender healthcare. The rule would disqualify such employers 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 of working for government or non-profit employers. Since Congress established it in 2007, more than one million borrowers have received debt relief.
Background of the Executive Order and Rule
In March 2025, President Donald Trump issued an executive order claiming that 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 'public service' work, excluding organizations engaged 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 in reference to gender-affirming care for transgender minors.
Lawsuit and Ruling
The plaintiffs, including Democratic-led states and non-profits, sued in November to block the rule from taking effect on July 1. They argued that the law creating the forgiveness program did not grant the Education Department discretion to create exceptions to eligibility and that the agency lacked a rational basis for the policy.
Tuesday's ruling marks the second legal defeat for the Trump administration's efforts to overhaul the federal student loan system in the past week. On Wednesday, another judge in Washington, D.C., barred the Education Department from implementing a rule that would impose lower federal student loan limits for graduate degrees in nursing and other healthcare fields.
