A federal judge in Boston on Tuesday blocked the Trump administration from enacting a rule that would have denied student loan forgiveness to public service workers whose employers the government deemed to have a “substantial illegal purpose.” The decision by U.S. District Judge Myong Joun prevents the rule from taking effect July 1 as scheduled.
The Public Service Loan Forgiveness program, created by Congress in 2007, cancels remaining federal student loan balances for borrowers who work for government agencies or nonprofit organizations and have made 10 years of qualifying payments. More than 1 million borrowers have received debt relief under the program since its inception.
President Trump signed an executive order in March 2025 that directed the Education Department to revise the program’s regulations. The order claimed the program had “misdirected tax dollars into activist organizations that not only fail to serve the public interest, but actually harm our national security and American values,” according to the order as reported by The Guardian.
The Education Department published a final rule in October 2025 redefining what constitutes “public service” work. The rule defined “substantial illegal purpose” to include activities such as aiding what the administration characterized as illegal immigration, supporting terrorism, engaging in illegal discrimination, or participating in what it described as “chemical and surgical castration or mutilation of children”—language the administration uses when referring to gender-affirming care for transgender minors.
In November 2025, a coalition of Democratic-led states, cities and nonprofit organizations sued to block the rule. The plaintiffs argued that the law establishing the forgiveness program did not give the Education Department authority to create eligibility exceptions and that the agency lacked a rational basis for the policy.
The plaintiffs said the rule was designed to target groups that support immigrants’ rights, transgender healthcare, diversity initiatives and political protest — causes the Trump administration disfavored.
Joun’s ruling found that the department had overstepped its statutory authority. The judge also questioned the department’s stated rationale, noting the agency’s own estimate that fewer than 10 employers would be affected under the new rule.
The decision came a week after a separate federal judge in Washington, D.C., blocked the Education Department from implementing a rule that would impose lower federal student loan limits for graduate degrees in nursing and other healthcare-related fields.