district judges issued rulings on June 30, 2026, that stopped a Trump administration regulation from taking effect on July 1, preserving existing eligibility
Two U.S. district judges issued rulings on June 30, 2026, that stopped a Trump administration regulation from taking effect on July 1, preserving existing eligibility criteria for the Public Service Loan Forgiveness program.
The rulings were issued by U.S. District Judge Amir Ali in Washington, D.C., and U.S. District Judge Myong Joun in New York, each finding that the Department of Education’s rule exceeded statutory authority and would have narrowed borrower eligibility [1][2].
The Department of Education announced the rule in May 2026, intending to apply it to the Public Service Loan Forgiveness (PSLF) program beginning July 1, 2026. The rule added new employer-verification requirements and limited qualifying repayment plans [3][4].
Legal Challenge and Court Decisions
U.S. District Judge Amir Ali issued a preliminary injunction on June 30, 2026, halting enforcement of the rule nationwide. In his order, Judge Ali cited the Administrative Procedure Act and noted that the regulation conflicted with the Higher Education Act’s definition of “qualifying employment” [1][2]. The injunction remains in effect pending further litigation.
On the same day, U.S. District Judge Myong Joun granted a similar injunction for borrowers in the Second Circuit. Judge Joun’s decision referenced the same statutory conflicts and emphasized that the rule would have retroactively altered eligibility for borrowers who had already met the ten-year service requirement [3][4]. Both judges ordered the Department of Education to maintain the pre-rule status of the PSLF program until the case is resolved.
The Department of Education filed motions for a stay of the injunctions, arguing that the rule was necessary to prevent fraud and ensure program integrity. The motions were denied by both courts, which affirmed that the rule’s implementation would cause immediate and irreversible harm to borrowers who had relied on the existing program criteria [1][3].
Both judges ordered the Department of Education to maintain the pre-rule status of the PSLF program until the case is resolved.
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The Trump administration’s regulation sought to tighten PSLF eligibility by requiring employers to submit annual certifications of employee status and by limiting qualifying repayment plans to the Income-Driven Repayment (IDR) series [4]. The rule also proposed to exclude borrowers whose employment was with certain for-profit entities that received federal contracts, a departure from the program’s longstanding inclusion of non-profit and government employers [2][3].
According to the Department of Education’s proposal, the new verification process would have been administered through an online portal, with non-compliance resulting in denial of forgiveness after ten years of qualifying payments [4]. The administration argued that the changes would close loopholes exploited by some borrowers and reduce the program’s cost to the federal budget [1].
Critics of the rule, including borrower advocacy groups, contended that the added documentation would create administrative burdens for small non-profits and could disqualify borrowers who had already completed the required service [2][3]. The courts’ injunctions reflect those concerns, citing the lack of clear congressional authorization for the expanded employer-verification requirements [1][4].
Immediate Impact on Borrowers
The injunctions preserve the current PSLF eligibility framework, allowing borrowers employed by government agencies, 501(c)(3) non-profits, and other qualifying organizations to continue pursuing forgiveness after ten years of qualifying payments [2][3]. Borrowers who had already submitted employment certifications under the previous rules are not required to redo the process [4].
For students currently enrolled in IDR plans or other qualifying repayment plans, the rulings mean that their payment histories remain valid toward the forgiveness count. No additional employer documentation will be required beyond the existing annual certification that borrowers already submit to the Department of Education [1][2].
For students currently enrolled in IDR plans or other qualifying repayment plans, the rulings mean that their payment histories remain valid toward the forgiveness count.
Educational institutions and non-profit employers are advised to continue using the existing PSLF verification forms and to inform employees that the proposed rule is not in effect. The Department of Education has indicated that it will review the litigation outcomes before issuing any further regulatory changes [3].
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The court decisions provide immediate certainty for public-service borrowers, preventing a sudden shift in program requirements that could have disrupted repayment planning. Financial aid offices at universities and colleges can continue to advise students about PSLF eligibility without accounting for the proposed employer-verification changes [2].
Non-profit organizations and government agencies are not required to implement new reporting systems, allowing them to maintain current human-resources processes related to employee loan assistance programs [4]. The rulings also signal to policymakers that any future modifications to PSLF will likely undergo heightened judicial scrutiny, influencing how future regulations are drafted [1][3].
Key Facts
What: Federal judges blocked a Trump administration rule that would have added new restrictions to the Public Service Loan Forgiveness program.
What: Federal judges blocked a Trump administration rule that would have added new restrictions to the Public Service Loan Forgiveness program.
When: Rulings issued on June 30, 2026; the rule was set to take effect on July 1, 2026.
Impact: Borrowers in public service can continue to qualify for loan forgiveness under existing criteria without the proposed employer-verification and plan-restriction changes.
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