Background: The U.S. Department of Education building is seen in Washington, Dec. 3, 2024. (AP Photo/Jose Luis Magana, File). Inset: President Donald Trump walks from Marine One after arriving on the South Lawn of the White House, Tuesday, July 15, 2025, in Washington (AP Photo/Alex Brandon, File).
The Trump administration's attempt to reduce the number of people who can benefit from a student loan forgiveness program is unlawful, two federal judges ruled in separate cases this week.
The U.S. Department of Education's (DOE) "final rule" on the Public Service Loan Forgiveness (PSLF) program purportedly intends to eradicate organizations engaging in "illegal" activities from benefiting from it.
But not only would making such determinations of illegality be "arbitrary" and in excess of the White House's authority, U.S. District Judge Myong J. Joun wrote in one of the cases, the administration's "history of prosecution" suggests it would make decisions based not on legality but on whether it fundamentally agrees or disagrees with an organization's purpose.
Joun, a Joe Biden appointee, broke down the history of the program and the litigation in a 68-page order issued the day before the rule was set to take effect. In 2007, Congress, "[r]ecognizing the need to encourage matriculation and retention in public service," created the program to "forgive the balance of a borrower's student loan in exchange for ten years of employment in a qualifying public service job and 120 loan payments."
In October 2025, the DOE announced its rule change, saying narrowing the types of organizations that qualify for the program would "prevent taxpayers from supporting loan forgiveness for borrowers whose organizations are breaking the law." The administration "amend[ed] the definition of a 'qualifying employer' to exclude employers that participate in illegal activities such that they have a substantial illegal purpose."
The rule identified six categories of activities the Trump administration deemed had a "substantial illegal purpose," including "[a]iding or abetting violations" of federal immigration laws and what it called "child abuse, including the chemical and surgical castration or mutilation of children or the trafficking of children to so-called transgender sanctuary States."
A group including 22 states sued in Massachusetts, where Joun sits, to stop the rule change. Multiple organizations also filed suit in Washington, D.C., in a case that went before U.S. District Judge Amir H. Ali, another Biden appointee.
The plaintiffs argued that they would suffer business disadvantages because individuals would seek employment elsewhere and the "threat of disqualification" would "itself deter new workers from entering public service."
Furthermore, the organizations in the Washington, D.C., case argue that the "requirement that the plaintiffs affirmatively certify they have not participated in activities that have a 'substantial illegal purpose' clearly imposes a new obligation that goes beyond what the plaintiffs are already doing by following the law."
The administration has argued "that there exists no threat of enforcement because the Department has not made any indication that any of the Plaintiffs will (or are likely to be) the target of any enforcement activity," as Joun recounts in the Massachusetts case.
The judge found this rationale unconvincing.
"In the absence of evidence to the contrary, Defendants' arguments might be persuasive. But the Administration's history of prosecution tells a different story," he writes, pointing to an example of the "ire" shown "toward those with immigration policies contrary to those held by the Administration." The judge added: "Even beyond immigration, the Administration has threatened legal action against generally lawful activity with which it disagrees."
Joun continues:
The rule thus leaves regulated entities to speculate about the scope of prohibited conduct while vesting the Department with substantial discretion to determine, after the fact, whether an employer has crossed an undefined line. Such indeterminate standards create a substantial risk of arbitrary enforcement. As Plaintiffs note, the Administration has prioritized enforcement in areas such as diversity, equity, and inclusion initiatives, raising the possibility that otherwise lawful conduct could be treated as evidence of "illegal discrimination" under the Final Rule's undefined standards. … By failing to articulate objective standards governing what constitutes "substantial illegal activity," "aiding and abetting," or a "pattern" of unlawful conduct, the Department has left employers to guess at their obligations while reserving broad discretion to determine eligibility on an ad hoc basis. That lack of ascertainable standards is itself a hallmark of arbitrary and capricious decision-making.
He concludes by saying the rule is "contrary to law and promulgated in excess of statutory authority," as well as "arbitrary and capricious" and "violates the First Amendment."
Ali ruled similarly in the Washington, D.C., case, finding that Education Secretary Linda McMahon exceeded her statutory authority.
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