WASHINGTON (AP) – The Trump administration expel some nonprofits If their work is deemed to have a “substantial illegal purpose,” they will be excluded from the popular student loan forgiveness program. It’s a measure that could exclude some teachers, doctors and other public servants from federal loan cancellations.
New rules finalized Thursday give the Department of Education expanded authority to ban organizations from the Public Service Loan Forgiveness Program. The Trump administration says it needs to stop lawbreakers from draining taxpayer funds. Critics say it turns the program into a tool. political revenge.
The policy, scheduled to take effect in July, primarily targets organizations that work with immigrants and transgender youth.
It would give the Secretary of Education the power to exclude from the program groups that engage in activities such as child trafficking, “chemical castration,” illegal immigration, and support for terrorist organizations. “Chemical castration,” defined as the use of hormone therapy or drugs to delay puberty, is a common form of gender-affirming care for transgender children and teens.
This represents a major rework of a program that has been canceling loans for years. 1 million Americans The program was established by Congress in 2007 to steer more college graduates into low-paying public sector jobs. The Trump administration has not yet identified specific groups to target, but estimates that fewer than 10 people will be banned annually.
“Illegal acts by their nature are contrary to the public interest,” the Department of Education said in a fact sheet. “Congress is focused on public services, and the Trump administration will not divert tax dollars from hard-working Americans to organizations that break the law.”
This program has rewarded a wide range of public service careers.
The program promises to cancel federal student loans for government employees and many nonprofit workers after 10 years of repayment. For many years, it was available to government employees, teachers, firefighters, and public hospital employees. The eligibility rules established by Congress primarily focus on the tax status of nonprofit organizations and their field of practice.
Its benefits went to organized workers across the political spectrum. still March actions Calling for new restrictions, President Donald Trump said, “Tax dollars are being mistakenly directed to activist organizations that not only do not serve the public interest, but actually harm our national security and American values, sometimes by criminal means.”
Critics’ central concern is that the department has wide discretion to decide whether an organization’s activities should be considered to have a “substantial illegal purpose.”
Employers in state and local governments and nonprofit organizations could be kicked out of the program if a state or federal court rules against them or if they agree to a legal settlement that involves an admission of guilt. For example, it appears that providing gender-affirming care could be grounds for expulsion in the 27 states that have outlawed gender-affirming care.
The Education Secretary can independently decide that an organization should be banned, even without legal evidence. The Commissioner will consider whether a “preponderance of the evidence” favors the employer.
In finalizing the rule, the department dismissed many concerns that the standard of evidence was too low.
“This ensures that decisions are based on facts, not speculation, and allows the Treasury Department to act quickly to protect both borrowers and taxpayers,” federal officials wrote.
Critics see room for ideologically-based decisions
Those opposed to the proposal included prominent groups in higher education, health care, and the legal community. In public comments submitted to the department, many said this was an illegal overreach and would undermine incentives that have helped solve labor shortages in high-demand fields.
The American Bar Association said the status of public defenders and public interest law attorneys could be lowered. The association said thousands of people will lose the opportunity to be represented “simply because the work of these lawyers has been deemed politically unfavorable by the Commissioner.”
The National Council of Nonprofits said the policy would allow future governments of any party to change eligibility rules “based on their own priorities and ideology.”
Rep. Tim Walberg (R-Mich.), chairman of the House Education and Labor Committee, said the overhaul would prevent taxpayers from funding loan relief for employees of “extremist organizations that violate state or federal law.” “Aiding and abetting illegal immigration, supporting terrorism, and promoting child abuse through gender transition are not ‘public services,'” Walberg said in a statement.
According to the new rules, employers can only be sanctioned for activities carried out after July 1, 2026. Employers will be notified and given an opportunity to consider the evidence and respond to the department’s findings. Those excluded from the program can reapply for eligibility after 10 years or rejoin sooner by following a “corrective action plan” approved by the Secretary.
Ministry documents indicate that depending on the circumstances, a single violation of the law may not be enough to fire an employer. The agency said not all organizations that violate the law have a “substantive illegal purpose” and that it ultimately comes down to the director’s analysis of the evidence.
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