Federal Judge Strikes Down Trump-Era Student Loan Forgiveness Rule

A federal judge on Tuesday struck down a Trump administration overhaul to a public service forgiveness program for student loans, ruling in favor of advocates who said the program risked becoming a tool for political retribution.

U.S. District Judge Myong Joun in Massachusetts vacated the U.S. Education Department's changes, saying they overstepped the agency's power and threatened to violate First Amendment protections for free speech. His ruling came a day before the new rules were set to take effect.

The ruling came in response to a pair of lawsuits filed by more than 20 states along with a coalition of nonprofit groups and cities. The Education Department did not immediately respond to a request for comment.

Congress created Public Service Loan Forgiveness in 2007 to encourage college graduates to work in government and nonprofit jobs. It promised to forgive their federal student loans after they worked in public service jobs for 10 years.

Last year the Trump administration moved to add new eligibility rules that would strip the benefit from workers whose employers are deemed to have a "substantial illegal purpose."

The overhaul targeted nonprofits and government organizations that support causes at odds with the Trump administration's priorities.

It gave the education secretary power to exclude groups from the program if they engage in the trafficking or “chemical castration” of children, illegal immigration or supporting terrorist organizations. Its definition of "chemical castration” included using hormone therapy or drugs that delay puberty.

Joun said the new rules threatened to impose the administration's policy views on employers. The judge also faulted the department for failing to connect its definitions of illegal activity to criminal statutes.

“The Department cannot create new criminal prohibitions through rulemaking,” he wrote.

The judge also questioned the department's stated rationale for proposing the new rules, drawing on its own estimates that fewer than 10 employers would be barred from the program per year.

“The Department offers no explanation for why a Final Rule with such sweeping consequences is necessary to address the possibility that, at most, ten employers each year may be engaging in illegal activity,” Joun wrote.

The overhaul amounted to a major reworking of a program that has canceled loans for more than 1 million Americans. Nonprofits and government groups said it undercut an important benefit that helped attract college graduates to jobs that traditionally pay lower than the private sector.

In his ruling, Joun noted that more than 100 supporting briefs were filed on behalf of the groups challenging the rules, while none were filed supporting the Trump administration's change.