President Donald Trump has made a series of contentious moves that could put student loan forgiveness at risk for thousands of public service employees nationwide. The Public Service Loan Forgiveness (PSLF) program, a federal program intended to alleviate student debt for those employed in nonprofit or government positions, now stands in the crosshairs.
The Origins of PSLF
PSLF was established in 2007 under President George W. Bush to encourage talent into lower-paid public service professions. If borrowers make 120 qualifying monthly payments while working full-time for a government agency or nonprofit organization, they can have their outstanding federal student loan debt forgiven. More than a million borrowers have taken advantage of the program, ranging from teachers and nurses to members of the military and nonprofit workers.
Trump’s Recent Actions Target PSLF
In April 2025, President Trump intensified efforts that could tear apart fundamental elements of PSLF. His administration directly targeted nonprofit institutions, namely Harvard University, proposing to strip it of tax-exempt status. This came in the wake of a public feud over university policies. Harvard pushed back on conditions that the Trump administration placed regarding admissions, hiring, and freedom of academics, labeling the ultimatums unconstitutional.
Trump replied by saying that Harvard might lose its 501(c)(3) nonprofit status. “Maybe Harvard should lose its tax-exempt status,” he wrote on Truth Social. There followed reports that the IRS was considering such a step.
If Harvard lost its nonprofit status, the consequences for its roughly 19,000 employees would be dire. They would lose their eligibility for PSLF, even though they meet all other qualifications. And this could be only the beginning.
Broader Target: More Nonprofits at Risk
Other analysts expect Harvard to be the first among many. Previous House GOP leader Newt Gingrich suggested that other nonprofit institutions and organizations might soon follow.
Trump claimed the group’s actions against him were politically motivated and questioned their charitable status. “We’re looking at that,” he told reporters, referring to the organization’s tax standing.
The trend is clear: nonprofits critical of the Trump administration or not aligning with its agenda may face consequences.
New Executive Order Increases the Threat
Only last month, Trump signed an executive order to further restrict PSLF eligibility. The order directs the Department of Education to write rules that exclude forgiveness for workers of organizations that have been accused of being involved in “illegal activities.” It cites general and imprecise terms like “human smuggling,” “public disorder,” and “illegal immigration” as reasons for exclusion.
Borrower advocates warn that the criteria are dangerously ambiguous. This could open the door to disqualifying entire categories of organizations, including state governments with diversity programs or hospital systems offering gender-affirming care.
Young Invincibles’ Kristin McGuire labeled the action “a political attack on nonprofits,” noting that the order singles out groups based on ideological differences. Lawyers also question the constitutional basis for such limitations, observing that PSLF’s authorizing law does not provide the President or the Department of Education with authority to impose these exclusions.
Potential Fallout for Healthcare Workers
Republican legislators in Congress are also targeting nonprofit hospitals. They are said to be working on a budget reconciliation bill that would strip some hospitals of their tax-exempt status to pay for tax reductions. If enacted, this shift could affect almost five million healthcare professionals, disqualifying them from PSLF.
Uncertain Future for Public Service Borrowers
For the time being, these reforms are in the works, but the message is unmistakable. Trump’s moves indicate a fundamental shift in how the federal government might approach student loan forgiveness. If the administration is able to strip nonprofit status from targeted schools, hundreds of thousands of borrowers might have their PSLF dreams dashed—after years of service and payments.
The effect would be an unprecedented rollback of one of the biggest student loan forgiveness programs in U.S. history. And since rulemaking is already under way, a large number of borrowers are left in suspense worrying that the commitment they counted on will no longer hold.
The fight over PSLF isn’t over yet—but for the time being, it’s at risk. All in all, students hope that one reform will happen and they will get rid of this loan.
