A pair of federal judges struck down a Trump administration overhaul to a public service forgiveness program for student loans, ruling Tuesday in separate cases 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. 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.
In Washington, D.C., District Judge Amir Ali in Washington issued a similar ruling in a case brought by nonprofit organizations. The rulings came a day before the new rules were set to take effect.
Under Secretary of Education Nicholas Kent said the department was evaluating next steps.
“The Department stands behind this commonsense policy to ensure that taxpayer dollars are never used to subsidize illegal activities,” Kent said in a written statement.
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.
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 less than the private sector.
“This decision is a win for the communities that depend on local nonprofits and for the workers who serve them,” said Diane Yentel, president and CEO of the National Council of Nonprofits, one of the plaintiffs in the Massachusetts case.
One of the plaintiffs in the Washington case, Student Defense, said the judge’s ruling is a victory for student loan borrowers.
“Public servants should not have to worry that the federal government will punish them because of their employer’s mission or perceived political views,” said Aaron Ament, Student Defense’s president.
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.
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 in support of the Trump administration’s change.
