President Trump has signed an executive order directing the administrative order to change the student loan forgiveness program for civil servants to eliminate nonprofits engaged in activities known as “substantially illegal purposes.”
His order to limit the program appears to target groups that support undocumented immigration, diversity initiatives and gender-affirming children's care, especially as the Trump administration tried to eliminate federal support for the efforts that sparked right-wing rage.
The order, published Friday, is the latest in many attempts to review the loan forgiveness program, which has often whipped borrowers with rules changes and bureaucratic obstacles.
Known as a public service loan exemption, the program was created by Congress in 2007 and cannot be ruled out without Congressional action, but the education sector has the capacity to decide how it works. Trump's executive order directed education secretaries and the Treasury to amend the program to exclude workers from organizations that support illegal activities, and listed several categories of examples, including “assistance or be” in federal immigration law.
The Trump administration has looked at a wide range of what it considers to be a support for illegal activities. The order, cited as an example of supporting “illicit discrimination,” states that it contained “illegal discrimination” that the administration had previously stated.
This order appeared to target groups supporting gender-affirming care. It said it would remove organizations that support “child abuse, such as “chemical and surgical castration and amputation of children” from the loan waiver program.
Trump's orders also elect organizations that engage in a “pattern” that breaks state laws against “trespassing, disorderly conduct, public nuisance, vandalism and highway obstruction.” Another clause targets people who support the “terrorism” that Trump officials used to explain the anti-Israel protests.
Such changes usually require an official rule creation process. This often takes months or years to complete and includes a period of public comment. However, the Trump administration frequently acted in ignoring clear legal restrictions. This is likely to cause a wave of anxiety for people who rely on complex programs.
President George W. Bush's administration has established a loan program. It aims to encourage people to work for governments and non-qualified nonprofits by alleviating the debt burden of universities. After making 120 monthly loan payments that require at least 10 years of service in a qualified job, borrowers are eligible to clear out the remaining federal student loan obligations.
The program has become a notoriously quagmire, with bureaucratic tripwire and loan service issues leading to a 99% rejection rate for those seeking forgiveness. President Joseph R. Biden Jr.'s administration has used immunity and exceptions to eliminate barriers, allowing more than a million people to use the program to eliminate a total of $79 billion in debt.
An estimated 2 million people have made payments that count towards their obligation to qualify for relief through the program. These borrowers often count down the month worrying until they reach the required 120 payments.
The program is open to borrowers working in government jobs at the federal, state, or local level, and those working for nonprofits who are not exempt under the Internal Revenue Service's 501(c)(3) law. Several other nonprofits are eligible, but many are exempt, including trade unions and partisan political organisations.
At various points in the history of the loan program, there was confusion about what constitutes “public services.” In 2019, three lawyers ruled in favour of the decision after being deemed ineligible.
Trump's order appears to aim for a disadvantaged organization, repeating a bill that allows the government to revoke tax-free status for nonprofits that were accused of supporting terrorist entities last year. Democrats feared the bill would be exploited by Trump to target his political opponents. The bill stagnated in the Senate.
Ron Lieber and Erica L. Green Reports of contributions.
