Overview

• The proposal defines “illegal activities” to include aiding federal immigration violations, supporting designated terrorist groups and providing gender-affirming care to minors
• It allows the education secretary to disqualify employers from Public Service Loan Forgiveness without requiring legal judgments or settlements
• Advocates caution that entire hospital systems, cities or nonprofits could be excluded over isolated actions by a single department, threatening relief for over 1 million public service workers
• The overhaul follows a March executive order by President Trump and is open for public comment ahead of a planned July 2026 implementation
• System failures at the Education Department have halted payment count tracking for IDR and PSLF borrowers, leaving many unable to verify their progress toward forgiveness