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Trump Administration Drops Appeal Over Weaponization of Public Service Loan Forgiveness Program

LANSING — Last week, the Trump administration dropped its appeal over a legal challenge to the administration’s illegal weaponization of the Public Service Loan Forgiveness (PSLF) program, announced Michigan Attorney General Dana Nessel. PSLF is the federal program that forgives the remaining federal student loans of borrowers who work in public service and make 10 years of qualifying payments. The administration had appealed a lower court decision vacating a U.S. Department of Education rule that would have allowed the Administration to strip PSLF eligibility from employees of government and nonprofit organizations it deems to have a “substantial illegal purpose.” As part of a coalition of 22 attorneys general, Attorney General Nessel sued the Trump administration in November 2025 over the rule and secured a decision from the U.S. District Court for the District of Massachusetts vacating the rule in June 2026. By dropping its appeal of the decision, the Trump administration concedes the case, leaving the District Court’s ruling in place and resolving the matter in favor of Michigan and other plaintiff states.

“Public service workers provide vital services, and help keep our communities safe and educated,” said Attorney General Nessel. “Teachers, government employees, nonprofit workers, and others who serve the public should be able to count on the rules Congress established, not worry that an administration will change them to target disfavored work. The administration has wisely abandoned its appeal. This leaves the Public Service Loan Forgiveness program to continue helping these deserving workers.”

Congress created the PSLF program in 2007 with bipartisan consensus to encourage college graduates to work in the public sector, where salaries are often lower than jobs in the private sector. PSLF helps nonprofits, the armed forces, and federal, state, and local government recruit and retain skilled workers who might otherwise be forced to turn to private sector employment to afford to repay their student loans. The administration’s rule would have used an ambiguous standard to target politically disfavored conduct. In the June 2026 order (PDF), the court held that the U.S. Department of Education’s regulations were contrary to law, arbitrary and capricious, exceeded the agency’s statutory authority, and violated the First Amendment of the U.S. Constitution.

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