Justice Department Drops Appeals Over Public Service Loan Forgiveness Restrictions

The United States Justice Department dropped its appeals on Wednesday regarding two court rulings that previously struck down restrictions on the Public Service Loan Forgiveness program. This development leaves the prominent student debt relief initiative for government and nonprofit employees functioning under its established rules.

The move concludes the administration's legal defense of June judicial decisions that invalidated a rule enabling the education secretary to disqualify specific employers from the program. Under that rule, employers could be removed if their work was determined to possess a substantial illegal purpose, which critics argued was intended to target organizations involved in immigration, transgender health care, and other opposed issues.

Federal attorneys submitted joint agreements alongside plaintiffs to dismiss the appeals, with both sides covering their respective legal costs. Representatives from the Education Department did not provide an immediate explanation for the reversal. Meanwhile, a separate appeal concerning a related lawsuit brought by a coalition of states remains pending before the U.S. Court of Appeals for the 1st Circuit.

Borrower advocates praised the decision as a critical win for public service professionals nationwide. Daniel Zibel, chief counsel at Student Defense, which represented plaintiffs in one of the challenges, stated that the attempt to weaponize the forgiveness program against disagreeable organizations was unlawful from the outset and celebrated the outcome as a significant victory for public servants.

Established by Congress in 2007, the Public Service Loan Forgiveness program eliminates remaining federal student loan debt for individuals working full-time in government agencies or qualifying nonprofit organizations after they complete 120 monthly payments across a span of ten years. The program serves a broad workforce that includes teachers, nurses, firefighters, police officers, social workers, and public defenders.

The challenged rule, introduced in October 2025, would have granted Education Secretary Linda McMahon the authority to strip program eligibility from employers rather than individual borrowers based on activities such as assisting undocumented immigrants or offering gender transition care to minors. Federal judges in Massachusetts and Washington, D.C., struck down the regulations on June 30, ruling that the agency had exceeded its authority and violated First Amendment protections by conditioning eligibility on organizational speech and viewpoints.

While the program currently continues under its standard eligibility criteria, borrowers have recently encountered other hurdles, including payment adjustments tied to administrative corrections and processing delays. Attention now turns to the remaining litigation involving state attorneys general, where a dismissal would permanently finalize the lower court rulings and keep future programmatic changes dependent on legislative action by Congress.