The court found that the Department of Education lacked the legal authority to impose such a disqualification standard. Department of Education rule that would have allowed the Secretary to disqualify certain employers from the Public Service Loan Forgiveness (PSLF) program based on a determination that the employer engages in activities with a "substantial illegal purpose."
In a memorandum opinion issued in Robert F. Kennedy Center for Justice and Human Rights v. McMahon, the U.S. District Court for the District of Columbia granted summary judgment to the plaintiffs—section 501(c)(3) organizations that employ people participating in the PSLF program—and vacated the rule. The court held that the rule is contrary to law and exceeds the Secretary's statutory authority, violating the Administrative Procedure Act.
The PSLF program, created by Congress in the 2007 College Cost Reduction and Access Act, requires the Secretary of Education to cancel the remaining balance on eligible federal direct student loans for borrowers who have made 120 monthly payments while employed full time in a public service job. The statute defines "public service job" to include full-time employment at a section 501(c)(3) organization exempt from taxation under section 501(a) of the Internal Revenue Code.
In March 2025, the President issued an executive order stating that the PSLF program "has misdirected tax dollars into activist organizations that not only fail to serve the public interest, but actually harm our national security and American values." The order directed the Secretary of Education to propose regulatory revisions to "ensure the definition of 'public service' excludes organizations that engage in activities that have a substantial illegal purpose." The order identified five categories of such activities, including "aiding or abetting violations of 8 U.S.C. 1325 or other Federal immigration laws," "supporting terrorism," and "engaging in a pattern of aiding and abetting illegal discrimination."
In October 2025, the Secretary issued a final rule amending the PSLF implementing regulations to eliminate loan forgiveness for borrowers employed at organizations that, on the Secretary's determination, "has a substantial illegal purpose." The rule defined "substantial illegal purpose" to include aiding or abetting violations of federal immigration laws, supporting terrorism, engaging in chemical or surgical castration or mutilation of children, trafficking children to another state for emancipation from parents, engaging in a pattern of aiding and abetting illegal discrimination, and engaging in a pattern of violating state laws such as trespassing, disorderly conduct, public nuisance, vandalism, and obstruction of highways. The rule was set to take effect on July 1, 2026.
The plaintiffs challenged the rule, arguing it exceeded the Secretary's statutory authority. The court agreed, finding that the rule is inconsistent with the statutory definition of "public service job," which includes employment at any section 501(c)(3) organization without additional conditions. The court vacated the rule.
No official response from the Department of Education is reported in the source account.
Informational content only, not legal advice. Consult a licensed immigration attorney.