Federal Court Blocks Administration’s Changes to Public Service Loan Forgiveness
Published July 13, 2026
By AACOM Government Relations
Federal Policy Financial Aid Higher Education Topics
- On June 30, 2026, a federal court ruled against the Trump administration in National Council of Nonprofits et al. v. McMahon, blocking enforcement of a final Public Service Loan Forgiveness (PSLF) rule that would have allowed the Secretary of Education to disqualify employers from the program if their work was deemed to have a “substantial illegal purpose.”
- The court found the rule unlawful because it exceeded ED’s statutory authority, was arbitrary and capricious and violated the First Amendment by tying loan forgiveness eligibility to whether an employer’s work aligned with the administration’s political priorities. The court ordered ED to stop enforcing the rule immediately.