Administration Drops Legal Fight Over PSLF Restrictions

Published November 02, 2026

By AACOM GRHA

Federal Policy Financial Aid

  • On October 21, 2026, the Trump administration moved to dismiss two of its three appeals challenging federal court rulings that blocked its changes to the Public Service Loan Forgiveness (PSLF).
  • Finalized last fall, the rule would have allowed ED to exclude employers from PSLF if their activities were deemed to have a “substantial illegal purpose,” potentially affecting borrowers working at nonprofits, schools and public hospitals.
  • A federal court vacated the rule just hours before its scheduled July 1, 2026, effective date, finding that the rule exceeded the administration’s statutory authority and violated the First Amendment.
  • The administration is expected to drop its remaining challenge, potentially finalizing the court’s June decision. While ED could pursue new rulemaking, its options are limited by the court’s findings.