Trump Reshapes Student Loan Program, Targeting Immigrant and Transgender Aid
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President Donald Trump is modifying the Public Service Loan Forgiveness program, which permits cancellation of student loans for many who work for the government or nonprofits after making payments for ten years, to remove benefits from organizations involved in “illegal activities”, potentially targeting those that serve immigrants and transgender youth. Critics fear it would give the department subjective authority to decide if an organization is engaged in anything illegal, potentially removing entire hospital systems or state governments from the program. The overhaul could block large numbers of student loan borrowers from cancellation, effectively forcing them to find new employment or miss out on loan forgiveness.
Trump’s Changes to Student Loan Program Raise Fears of Political Retribution
President Donald Trump is making changes to a student loan cancellation program, raising concerns it could be used as a tool for political retribution. The reformation targets organizations serving immigrants and transgender youth.
The Public Service Loan Forgiveness (PSLF) program has benefitted government employees and non-profit workers, cancelling their loans after 10 years of payments. The Education Department’s proposed changes may end benefits for organizations involved in ‘illegal activities’, a determination left to the U.S. education secretary.
Critics fear this measure could provide the department with subjective authority to deem an organization illegal, impacting both hospital systems or state governments. Betsy Mayotte, president of the Institute of Student Loan Advisors, labeled this as a potential political punishment tool.
Over 1 million Americans, including nurses, college staff and park rangers, have seen loans cancelled through PSLF. Trump’s changes could potentially block many student loan borrowers from cancellation, forcing them to change jobs or forego loan forgiveness.
The proposal’s definitions of ‘illegal activities’ mimic those of Trump, including ‘aiding or abetting’ immigration law violation, aiding foreign terrorist organizations, and violating the Civil Rights Act of 1964. Critics warn of the potential to strip entire hospital systems or cities of benefits due to a single department’s activities.
Trump’s plan, announced in March, was designed to stop ‘misdirected tax dollars’ benefitting activist organizations. The proposed changes could be another tool in Trump’s campaign against universities perceived to oppose his politics, warns Alyssa Dobson, financial aid director at Slippery Rock University.
While some welcomed improvements to the rule, there was major concern over the need for employers to certify they do not engage in illegal activities. Failure to certify could render an organization ineligible, potentially disrupting loan cancellation for many borrowers.
The Education Department ensures it is open to changes based on the panel’s concerns. A formal proposal is being prepared, with a public comment period before being finalized for expected implementation in July 2026.
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