Trump administration drops appeal of ruling blocking limits on public service loan forgiveness

The Education Department agreed to end its legal challenge to a June court decision that struck down plans to narrow eligibility for the Public Service Loan Forgiveness program.

By LineZotpaper

Published21 October 2026

Read Time3 min

The Trump administration has agreed to drop its appeal of a federal ruling that blocked its plan to restrict eligibility for the Public Service Loan Forgiveness program, marking a significant victory for government and nonprofit workers seeking student debt relief. The Education Department had planned to exclude employers that did not align with the administration’s definition of 'public service,' which included actions such as assisting with gender-affirming care or 'acts of terrorism.' A judge ruled the plan unlawful in June, and the administration appealed in August. With the appeal now set to be dismissed, borrowers will not face immediate changes to the program, though another appeal in a separate lawsuit remains pending.

Student-loan borrowers pursuing relief through the Public Service Loan Forgiveness (PSLF) program received a rare legal win this week when the Trump administration agreed to drop two of its appeals of a June ruling that blocked its effort to narrow the program's eligibility. The ruling had prevented the Education Department from implementing a plan, scheduled to take effect July 1, that would have excluded employers from PSLF if they did not conform to the administration's definition of "public service." The department had listed activities such as assisting with gender-affirming care or 'acts of terrorism' as disqualifying grounds.

A federal judge ruled at the end of June that the plan was unlawful and would not take effect, following lawsuits filed by advocacy groups including Student Defense, which argued that the education secretary lacked the authority to make those changes. The administration appealed the decision in late August but has now agreed to drop that appeal.

Dan Zibel, chief counsel at Student Defense, said in a statement: "The Trump administration's attempt to weaponize public service loan forgiveness against organizations it disagrees with was anti-democratic and unlawful from the start. This is a significant victory for millions of Americans who have dedicated their careers to public service."

The Education Department did not immediately respond to a request for comment. Undersecretary of Education Nicholas Kent had previously said the rule was intended to "ensure federal benefits go to our Nation's teachers, first responders, and civil servants who tirelessly serve their communities."

Despite the legal victory, PSLF borrowers still face challenges. The Education Department recently removed some borrowers' payments toward forgiveness, citing Biden-era coding errors, and others have reported delays in getting their payments counted toward relief. A department spokesperson previously said the agency "remains committed to ensuring that every qualifying payment is properly credited to a borrower's account."

The administration has another appeal pending in a separate PSLF lawsuit, leaving some uncertainty about the program's future.

Analysis

Why This Matters

The decision removes an immediate threat to the Public Service Loan Forgiveness program, which allows government and nonprofit workers to have their federal loans forgiven after 10 years of qualifying payments.
The case signals that courts may be willing to block executive actions that attempt to unilaterally redefine eligibility for congressionally created loan forgiveness programs.
With another appeal still pending, borrowers remain in a state of uncertainty about the long-term stability of the program.

Background

The Public Service Loan Forgiveness program was created in 2007 to encourage Americans to enter public service careers by forgiving their federal student loans after 10 years of qualifying payments while working for a qualifying employer. The program has been subject to frequent administrative changes and legal challenges. In 2023, the Biden administration expanded eligibility and temporarily waived some requirements, but those changes were also contested. The Trump administration's effort to restrict PSLF by defining "public service" narrowly represented a major shift in policy direction, one that advocates argued would exclude organizations providing healthcare, education, and other services to vulnerable populations.

Key Perspectives

Student Defense and borrower advocates: They view the dropped appeal as a significant victory and a check on executive overreach. They argue the department lacked legal authority to rewrite the definition of public service, and that the attempted changes were politically motivated. The Trump administration: Officials had argued the rule was necessary to ensure that federal benefits go to teachers, first responders, and civil servants who truly serve communities, rather than to organizations the administration disagreed with. Critics and observers: Some note that even with this legal win, PSLF remains administratively troubled, with borrowers still reporting errors, delays, and payment miscounts. The pending second appeal could still produce adverse outcomes for the program.

What to Watch

The outcome of the second pending PSLF appeal, which could further shape the program's eligibility rules.
The Education Department's handling of borrower payment credits, including whether the agency corrects the coding errors that have removed some payments from forgiveness counts.
Congressional action on PSLF reform or funding, particularly if the program remains a political flashpoint.

Sources

Student-loan borrowers win as Trump drops legal battle to narrow a major forgiveness program for public servants · All Content from Business Insider

Checked

10 claims in this story checked against 1 source: 8 supported.

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Partly supportedThe Trump administration agreed to drop an appeal of the ruling.All Content from Business Insider: “On Wednesday, the Trump administration agreed to drop two of its appeals of a June ruling”
Partly supportedThe Education Department agreed to end its legal challenge to the June decision.All Content from Business Insider: “On Wednesday, the Trump administration agreed to drop two of its appeals of a June ruling”
SupportedThe administration agreed to drop two appeals of a June ruling that blocked its plan to narrow PSLF eligibility.All Content from Business Insider: “On Wednesday, the Trump administration agreed to drop two of its appeals of a June ruling that had blocked its plan to narrow eligibility for the Public Service Loan Forgiveness program”
SupportedThe plan would have excluded employers whose activities did not align with the administration’s definition of public service, including assisting with gender-affirming care or acts of terrorism.All Content from Business Insider: “The Education Department intended to implement a plan on July 1 to exclude employers from PSLF who did not align with the administration's definition of "public service," listing actions like assisting with gender-affirming care or 'acts of terrorism.”
SupportedA judge ruled at the end of June that the plan was unlawful and would not take effect.All Content from Business Insider: “A judge ruled at the end of June that the plan was unlawful and would not take effect.”
SupportedDan Zibel said the administration’s attempt to weaponize PSLF was anti-democratic and unlawful from the start.All Content from Business Insider: “"The Trump administration's attempt to weaponize public service loan forgiveness against organizations it disagrees with was anti-democratic and unlawful from the start," Dan Zibel, chief counsel at Student Defense, said in a statement.”
SupportedUndersecretary of Education Nicholas Kent said the rule was intended to ensure federal benefits go to teachers, first responders and civil servants.All Content from Business Insider: “Undersecretary of Education Nicholas Kent previously said that the rule had been intended to "ensure federal benefits go to our Nation's teachers, first responders, and civil servants who tirelessly serve their communities."”
SupportedThe Education Department did not immediately respond to a request for comment.All Content from Business Insider: “The Education Department did not immediately respond to a request for comment from Business Insider.”
SupportedThe Education Department recently removed some borrowers’ payments toward forgiveness, citing Biden-era coding errors, and other borrowers reported delays getting payments counted.All Content from Business Insider: “The Education Department recently removed some borrowers' payments toward forgiveness, citing Biden-era coding errors. Others have reported delays getting their payments counted toward relief”
SupportedAn appeal in a separate PSLF lawsuit remains pending.All Content from Business Insider: “Another appeal in a separate PSLF lawsuit is still pending.”