Federal Judges Strike Down Student Loan Forgiveness Restrictions
At the end of June, 2026, two federal judges issued injunctions preventing the Department of Education from using new regulations changing the federal Public Service Loan Forgiveness program.
These rulings arrived one day before the changes were scheduled to take effect, but an appeal by the federal government is likely. The Department of Education released a statement acknowledging the decisions, maintaining that the goal of the initiative was to ensure that federal aid does not support so-called illegal activities (see below).
Federal Judges Strike Down Student Loan Forgiveness Restrictions
The court actions halt a plan that granted the Secretary of Education authority to decertify employers from the Student Loan Forgiveness Program if they were determined to have a so-called “substantial illegal purpose.” If this is confusing to you, you are not alone. What does this mean?
According to a report by APNews, “The overhaul targeted nonprofits and government organizations that support causes at odds with the Trump administration’s priorities. It gave the education secretary power to exclude groups from the program” if they are believed by the federal government to be involved in the ‘trafficking or ‘chemical castration’ of children, illegal immigration, or supporting terrorist organizations.”
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What the Judges Say
Judge Myong J. Joun of the United States District Court for the District of Massachusetts and Judge Amir H. Ali of the District of Columbia issued the rulings. Both judges sided with a coalition of plaintiffs, including state governments, labor unions, cities, and nonprofit organizations. Both military members and military spouses may be affected by the judges’ rulings.
The court concluded the proposed regulation exceeded the scope of the authority granted to the agency by Congress. Judge Joun characterized the regulation as arbitrary and inconsistent with federal law. His opinion holds that the Education Department lacks authority to establish new criminal prohibitions through rulemaking.
A central point of contention was the agency’s lack of evidence to justify such a wide-reaching policy change. The department admitted in internal estimates that the new rules would likely affect fewer than ten employers per year. Judge Joun argued that creating a regulatory mechanism of this scale for so few instances failed to meet the required standard of necessity.
Chilling Effects and the Status Quo
The court suggested that granting a government official the power to label an organization as having a substantial illegal purpose, based on broad definitions, could chill free speech and association. By allowing the Education Department to effectively block employers, the court reasoned, the government would create a system prone to political misuse.
The immediate effect of the injunctions is to maintain the status quo for the Public Service Loan Forgiveness program. Borrowers employed by organizations targeted for decertification continue to earn credit toward student loan forgiveness. The decision provides a temporary victory for the coalition of plaintiffs.
The Public Service Loan Forgiveness program, established in 2007, was designed to encourage graduates to work in public service roles by forgiving the balance on their federal student loans after 10 years of payments. The program covers teachers, nurses, emergency responders, and employees of government agencies or nonprofit entities.
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About the author
Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.
