Are changes to Public Service Loan Forgiveness unconstitutional?

on in Education
Another of President Trump’s executive orders threatens education access and opportunity. The executive order seeks to upend Public Service Loan Forgiveness and exclude employers that engage in “illegal activities.” But in truth, this definition is not clear and could mean denying Public Service Loan Forgiveness because an organization’s advocacy work centers or supports undocumented immigrants and other historically underserved populations.

During the early 2000s, UnidosUS Education Policy Project Senior Director Amalia Chamorro and UnidosUS California State Director Esmeralda López both had to take out tens of thousands of dollars to attend law school, knowing they wanted to represent Latino and other historically underserved communities. Foregoing lucrative roles in litigation for ones in the nonprofit sector was a sacrifice they were willing to make. In the midst of inflation, they managed to work toward paying their debt by participating in the United States Department of Education’s Public Service Loan Forgiveness (PSLF). 

Founded in 2007, the program was designed to cancel any outstanding debt for borrowers who dedicated a significant portion of their careers to areas such as public health education, public safety and the defense of civil rights while making loan payments. 

Both UnidosUS staff members were among 872,000 borrowers to have their debt wiped clean in 2024 during the final year of the Biden administration, while just 7,000 graduates achieved the same goal in the 17 years prior. But now an executive order by President Donald Trump threatens to upend this program for hundreds of organizations by asserting activities such as advocating for the rights of undocumented immigrants and other historically underserved populations, broadly defined as DEI (diversity, equity and inclusion), as illegal. 

“This action seeks to unfairly punish nonprofit workers who are serving communities all across the country, just because the president doesn’t like the mission of the organizations they work for,” says Chamorro. “Through PSLF, the federal government made a promise to public servants who made financial sacrifices that there would be light at the end of the tunnel, and that promise should be kept.” 

In order to enact the president’s executive order, the Department of Education must engage in a rulemaking process, in which the department updates the rules and procedures that dedicate how PSLF is administered by employers and the federal government. During this process, the department is required to hold public hearings and engage stakeholders to discuss the proposed changes.  

Under the new rules, employers that engage in what the department defines as “substantially illegal activities” would no longer be considered a qualifying employer for borrowers under PSLF. Many advocates point out that the department’s broad definitions would include organizations that advocate for gender-affirming care; immigration rights; civil protest; and diversity, equity and inclusion.  

Over the last six months, UnidosUS and dozens of civil rights organizations have rallied to protect their participation in PSLF, testifying in letters and oral arguments that these assertions run contrary to the U.S. Constitution and the First Amendment. 

During this regulatory rulemaking process, UnidosUS Senior Policy Analyst for Higher Education Magin Sanchez told the Department of Education that UnidosUS was strongly opposed to efforts to engage with “viewpoint discrimination,” noting that “PSLF was created as a vital investment in our country’s future, empowering talented graduates to strengthen the very foundation of our democracy through public service.” 

“Our Constitution and its First Amendment remain the same,” former UnidosUS Education Policy Analyst Tania Valencia told department officials. At the time of the hearing, she was serving as a higher education senior program manager at the Leadership Conference on Civil and Human Rights. “The department does not have the authority to exclude employers based on their participation in disfavored speech and activities. Every major civil rights advancement, from the desegregation of schools to marriage equality, began as a viewpoint that challenged existing power structures.”  

Throughout the rulemaking process, UnidosUS has been sounding the alarm that excluding certain organizations from PSLF not only defies constitutionally protected free speech but also significantly hurts the U.S. economy and societal wellbeing, which is exactly the opposite of what Trump argues in his executive order.  

Historically, it is the Internal Revenue Service that determines employer eligibility, a level of expertise the Department of Education does not possess. UnidosUS was one of dozens of nonprofit organizations to submit letters or sign onto letters written in the same spirit of defense by other organizations to the Department of Education. In them, they questioned the Trump administration’s attempts to categorize advocacy work as “illegal” because of the way it centers historically underserved populations such as people of color, immigrants and the LGBTQ+ community.  

“The law clearly establishes statutory authority for broad-based eligibility for 501(c)(3) tax-exempt organizations, and we reject politically motivated attempts to narrow this eligibility and break the longstanding commitment made to borrowers who have been faithfully making payments for years,” UnidosUS wrote in its individual May 5 letter.  

“Under these rules, nonprofits offering such support risk losing PSLF eligibility — not because they engage in illegal conduct, but because their work conflicts with the administration’s ideological narrative,” stated a May 5 group letter sponsored by the Student Loan Borrower Protection Center and Democracy Forward and signed by UnidosUS and 185 socially inclusive non-profits.

Under the department’s proposed rule, the secretary of education has the power to make the determination if an employer engages in “substantially illegal activities.” If so, student loan payments made while employed under said employer would no longer count toward forgiveness, starting after said disqualification determination is made. Employers that lose eligibility would be able to regain eligibility after 10 years or upon the approval of a corrective action plan that stops engaging with said activities.  

“It is deeply concerning that this rule provides extensive power to the secretary with little to no independent oversight, nor recourse for disqualified organizations,” says Sanchez. 

Leveraging PSLF while working in schools, community clinics, fire and rescue, and other public-serving sectors has allowed borrowers to settle their debt in exchange for community service that is often underpaid. In so doing, these borrowers can achieve and contribute to the American dream by buying homes, starting businesses or even planning families whose children are the future workforce. 

“This program not only addresses severe staffing shortages in essential sectors like education and public safety but also ensures access to careers without crushing debt,” says Sanchez. “Latinos, like too many Americans, are currently unable to meet their basic needs.” 

The Department of Education released its draft rule on Aug. 18. From that time, a new 30-day period of public comment began, wherein interested individuals and parties may submit written feedback. UnidosUS submitted two comment letters:  

 Should the final rule be finalized by Nov. 1, 2025, it will take effect on July 1, 2026.   

–Author Julienne Gage is a former UnidosUS staff member and longtime contributor to the Progress Report blog. She is currently obtaining her PhD in Anthropology in Florida International University’s Global and Sociocultural Studies Department.

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