Two U.S. district judges issued rulings on June 30, 2026, that halt enforcement of a Trump administration rule restricting eligibility for the Public Service Loan Forgiveness (PSLF) program. The decisions keep the program’s original ten-year forgiveness criteria in place for qualifying public-service workers.

The rulings were issued on June 30, 2026, one day before the Trump-era restrictions were scheduled to take effect nationwide [1]. The orders came from federal courts in the United States; one decision was handed down by U.S. District Court Judge Myong Joun in Boston, Massachusetts [1]. The actions directly involve the Department of Education, the Trump administration’s final rule on PSLF, and the millions of borrowers who rely on the program [2].

The Trump administration had finalized a rule in early 2026 that narrowed PSLF eligibility by redefining “qualifying employment” and limiting the types of repayment plans that counted toward the ten-year service requirement [2]. Education Secretary Linda McMahon announced the rule in a November 2025 briefing, stating that the changes were intended to “ensure program integrity” [4].

Plaintiffs, representing public-service employees, filed a lawsuit arguing that the rule exceeded the Department of Education’s statutory authority and violated the Administrative Procedure Act [1]. The district judges concluded that the rule was “arbitrary and capricious” and therefore could not be enforced, issuing injunctions that prevent the restrictions from taking effect [1].

Legal Background and Court Decision

The Department of Education’s rule, issued in February 2026, sought to limit PSLF forgiveness to borrowers who were employed by specific federal, state, or local government agencies and certain nonprofit organizations that met newly defined criteria [2]. The rule also required borrowers to be on an income-driven repayment plan for the full ten-year period, excluding other plans that had previously qualified [2].

In the lawsuit filed by the Public Service Loan Forgiveness Coalition, plaintiffs contended that the rule conflicted with the Higher Education Act of 1965, which authorizes the PSLF program, and that the Department failed to provide a reasoned explanation for the narrowed definition [1]. Judge Myong Joun issued a preliminary injunction on June 30, 2026, stating that the plaintiffs were likely to succeed on the merits and that the public interest favored maintaining the existing program [1]. A second district judge issued a parallel injunction, reinforcing the finding that the rule was “arbitrary and capricious” under the Administrative Procedure Act [4].

The rule also required borrowers to be on an income-driven repayment plan for the full ten-year period, excluding other plans that had previously qualified [2].

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Both orders remain in effect while the case proceeds through the federal appellate system [1].

The rulings do not overturn the entire PSLF program; they only block the specific restrictions introduced by the Trump administration. The Department of Education has indicated that it will review the injunctions and consider alternative regulatory approaches, but no new rule changes have been announced as of the date of the rulings [3].

Program Details and Scope of the Blocked Restrictions

The PSLF program, created in 2007, forgives the remaining balance on Direct Loans after a borrower makes 120 qualifying monthly payments while employed full-time in public service [2]. Qualifying employment includes work for federal, state, local, or tribal government agencies, as well as nonprofit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code [2].

The Trump-era rule would have redefined “qualifying employment” to exclude many nonprofit entities that did not meet a new “public-interest” test, and it would have required borrowers to remain on an income-driven repayment plan for the entire ten-year period [2]. Under the blocked rule, borrowers who were on standard repayment plans or who worked for nonprofits not meeting the new test would have lost eligibility for forgiveness [2].

By blocking the rule, the judges preserve the broader eligibility criteria that have been in place since the program’s inception. Borrowers can continue to use any repayment plan that qualifies under existing regulations, and a wider range of nonprofit employers remains eligible [1].

Under the blocked rule, borrowers who were on standard repayment plans or who worked for nonprofits not meeting the new test would have lost eligibility for forgiveness [2].

Immediate Impact on Borrowers and Institutions

The injunctions provide immediate certainty for approximately 800,000 current PSLF borrowers and an estimated 2 million potential applicants who were concerned about the impending rule [2]. Borrowers can continue to make payments under their existing repayment plans without fear of losing eligibility, and they may still receive forgiveness after ten years of qualifying service [1].

Higher education lenders and loan servicers, including FedLoan Servicing and MOHELA, are instructed to process PSLF applications under the pre-rule guidelines, avoiding the administrative changes that the blocked rule would have required [3]. Public-service employers, such as schools, hospitals, and government agencies, can continue to assure employees that participation in PSLF will not be jeopardized by the new criteria [2].

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The Department of Education has announced that it will issue guidance confirming that the injunctions are in effect and that borrowers should not experience any disruption to their repayment or forgiveness timelines [4]. No further legislative action has been taken, and the case is expected to proceed to the U.S. Court of Appeals for the Federal Circuit, where the parties will argue the merits of the rule’s legality [1].

Key Facts

What: Federal judges blocked a Trump-era rule that would have narrowed eligibility for the Public Service Loan Forgiveness program.

Impact: Borrowers retain the original ten-year forgiveness criteria, preserving eligibility for millions of public-service workers.

When: June 30, 2026, one day before the rule was set to take effect.

Impact: Borrowers retain the original ten-year forgiveness criteria, preserving eligibility for millions of public-service workers.

Sources

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• US judge blocks Trump’s limits on student loan forgiveness – Reuters
• Judge blocks rule to strip public service workers of student loan forgiveness – The Guardian
• Judges strike down Trump’s restrictions on loan forgiveness for public servants – MSN
• Judges toss Trump’s loan forgiveness rule – POLITICO