Two federal judges issued injunctions on June 30, 2026, preventing a Trump administration regulation from restricting eligibility for the Public Service Loan Forgiveness program.
Two U.S. District Courts issued rulings on Tuesday that prevent a Trump-era regulation from taking effect, preserving existing eligibility criteria for the Public Service Loan Forgiveness (PSLF) program. The rulings keep the program’s rules unchanged for borrowers employed by public-sector employers nationwide.
The decisions were rendered on June 30, 2026, the day the rule was scheduled to become effective on July 1, 2026. Judges Amir Ali and Myong Joun each issued separate orders striking down the regulation that would have added new employer-based restrictions to PSLF. The actions were taken in federal district courts in Texas and New York, respectively, and apply to the U.S. Department of Education’s nationwide forgiveness program.
The rule originated from the Trump administration’s Department of Education, which sought to narrow PSLF eligibility by limiting forgiveness to borrowers whose employers met specific “public-service” criteria. The regulation was challenged by a coalition of public-service borrowers and advocacy groups, who argued that the changes would retroactively disqualify many participants. In its rulings, Judge Ali cited the need to protect borrowers’ reliance on the existing program, while Judge Joun emphasized that the administration had not provided adequate justification for the new restrictions. Both judges issued temporary injunctions that halt enforcement of the rule pending further litigation.
Legal Background and Judicial Findings
The Trump administration announced the rule in early 2026 as part of a broader effort to tighten federal student-loan programs. The regulation would have required that qualifying employers be “governmental” or “nonprofit” entities that meet a narrow definition, effectively excluding many state- and local-government employees and nonprofit workers from PSLF eligibility. The Department of Education indicated the rule was intended to curb perceived abuse of the forgiveness program, but the text of the regulation also altered the definition of qualifying employment retroactively.
Plaintiffs filed lawsuits in two districts, arguing that the rule violated the Administrative Procedure Act and the Borrower Defense to Repayment provisions. In the Northern District of Texas, Judge Amir Ali granted a preliminary injunction, stating that the plaintiffs demonstrated a likelihood of success on the merits and that the rule would cause irreparable harm to borrowers who had relied on the existing eligibility criteria. On the same day, Judge Myong Joun of the Southern District of New York issued a similar injunction, noting that the rule’s implementation would “disrupt the expectations of thousands of public-service borrowers” and that the Department had not provided a reasoned explanation for the change.
The regulation would have required that qualifying employers be “governmental” or “nonprofit” entities that meet a narrow definition, effectively excluding many state- and local-government employees and nonprofit workers from PSLF eligibility.
Both rulings reference the Administrative Procedure Act’s requirement for agencies to provide a reasoned analysis when altering longstanding regulations. The judges found that the Department’s justification—primarily cost savings—was insufficient to outweigh the potential disruption to borrowers who had already begun making qualifying payments under the prior rules. The injunctions remain in effect while the parties proceed to a full merits hearing, which could extend into 2027.
The injunctions preserve the current PSLF eligibility framework, which allows borrowers employed by any government or nonprofit organization that meets the existing definition to qualify for loan forgiveness after 120 qualifying monthly payments. As a result, public-service employees—including teachers, nurses, police officers, and state-government workers—can continue to make payments toward forgiveness without concern that a change in employer classification will disqualify them.
For higher-education finance offices and loan servicers, the rulings eliminate the need to adjust eligibility verification processes in anticipation of the July 1 deadline. Institutions that advise students on federal loan repayment options can maintain existing counseling materials, and borrowers can continue to submit the required Employment Certification Form without additional documentation. The Department of Education has indicated it will not enforce the blocked rule and will continue to process forgiveness applications under the pre-existing criteria.
The decisions also signal to policymakers that regulatory changes to federal student-loan programs may face heightened judicial scrutiny, particularly when they affect large populations of borrowers with established expectations. While the injunctions are temporary, they provide immediate certainty for borrowers currently pursuing PSLF and for employers who rely on the program as a recruitment and retention tool.
Key Facts
What: Two federal judges blocked a Trump administration rule that would have narrowed eligibility for the Public Service Loan Forgiveness program.
For higher-education finance offices and loan servicers, the rulings eliminate the need to adjust eligibility verification processes in anticipation of the July 1 deadline.
When: Rulings issued on June 30, 2026; the rule was set to take effect on July 1, 2026.
Impact: Borrowers employed by public-service employers retain current eligibility for loan forgiveness; loan servicers and education institutions maintain existing processes.
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