WASHINGTON (news agencies) — President Donald Trump is reshaping a student loan cancellation program into what some fear will become a tool for political retribution, taking aim at organizations that serve immigrants and transgender youth.
Public Service Loan Forgiveness allows government employees, such as teachers and firefighters, plus many who work for nonprofits, to have their student loans canceled after they’ve made payments for 10 years. The Education Department is preparing an overhaul that would strip the benefit from organizations involved in “illegal activities,” with the final determination left up to the U.S. education secretary. A draft proposal released by the department includes definitions of illegal activity that center on immigration, terrorism and transgender issues.
Several advocates invited to weigh in on the draft proposal raised concerns it would give the department subjective authority to decide if an organization is engaged in anything illegal — a power that could be used to remove entire hospital systems or state governments from the program.
“That’s definitely an indicator for me that this is politically motivated and perhaps will be used as a tool for political punishment,” said Betsy Mayotte, president of the Institute of Student Loan Advisors and one of the advocates asked to review the policy as part of a rulemaking process.
More than 1 million Americans have had loans canceled through the program, including nurses, college staffers and park rangers.
Congress created the program in 2007 to encourage college graduates to work in the public sector, where salaries are often lower than at for-profit companies. The program promises to cancel all remaining debt after borrowers make 120 monthly loan payments while working for any level of government. Currently, nonprofits also are eligible if they focus on certain areas including public interest law, public health or education.
A federal database of eligible nonprofits currently includes some that provide grants to transgender youth and their families so they can travel to states that permit gender-affirming care for minors. It also includes some that provide legal services to immigrants regardless of their legal status.
Trump ordered changes to the program in March, declaring it had “misdirected tax dollars into activist organizations” that harm national security. He directed the Education Department to remove organizations tied to illegal activities, singling out those that work with immigrants or transgender youth or those that support terrorism — a label he often applies to pro-Palestinian activists.
His plan has the potential to block huge numbers of student loan borrowers from cancellation. Those who work for an ineligible employer would no longer be able to make progress toward cancellation, effectively forcing them to find a new job or forgo loan forgiveness.
The proposal’s definitions of illegal activity largely mirror those laid out by Trump. They include “aiding or abetting” in the violation of federal immigration law, and supporting any group designated as a foreign terrorist organization. Also on the list are violations of the Civil Rights Act of 1964, a law Trump officials have invoked to root out diversity, equity and inclusion policies.
Also considered illegal is “engaging in the chemical and surgical castration or mutilation of children in violation of Federal or State law.” It says that includes the use of hormone therapy or drugs that delay puberty. It defines children as those under 19.
It raises concerns that entire hospital systems could become ineligible if a single department provides certain care to transgender youth. Likewise, the federal government could potentially strip the benefit from entire cities that limit cooperation with federal immigration officials.
“I could see entire cities and entire civil structures being targeted,” said Alyssa Dobson, financial aid director at Slippery Rock University and a member of the rulemaking panel. It could also give the administration another tool in its campaign against universities that run afoul of the president’s politics, she said.
“This unfortunately may allow them to further chase the undesirable institutions, in their view,” she said.
When determining if an employer should be deemed ineligible, the department’s proposal would take into account court judgments and other legal findings. But it leaves room for at least some degree of subjectivity, giving the education secretary the authority to exclude organizations without proof of a conviction or settlement.
