The new rules will exclude those employed by nonprofits engaged in improper or illegal activities from receiving loan forgiveness.
WASHINGTON—President Donald Trump signed an executive order on March 7 that will modify the public service loan forgiveness program to nullify eligibility for applicants who work for nonprofit organizations that are deemed to be engaging in improper or illegal activities.
The order will direct the Departments of Education and Treasury to begin adjusting the student loan forgiveness program to disqualify nonprofits participating in a host of activities, including child abuse, discrimination, illegal immigration, and public disruptions, according to a White House official.
The move is needed “to ensure that people who are engaged in these types of activities can’t benefit from a program that isn’t really meant to support those types of things,” Will Scharf, White House staff secretary, said during a meeting with Trump in the Oval Office on March 7.
According to the White House, the goal of the order is to protect American values and national security, while preventing organizations with questionable behavior and their employees from benefitting from taxpayer-funded handouts.
Trump has been targeting what he described as wasteful and inappropriate government spending since taking office for a second time.
He established the Department of Government Efficiency, which is overseen by special government employee Elon Musk and is seeking to eliminate programs perceived as costly and ineffective.
It is unclear the amount of loan the new guidelines would impact.
Established in 2007 to incentivize the pursuit of public service careers by allowing for student loan forgiveness, the program was included in the College Cost Reduction and Access Act and signed into law by President George W. Bush.
Borrowers must make monthly payments for at least 10 years while employed by certain nonprofit organizations, or federal, state, or local governments to qualify for the program. Forgiveness is offered tax-free to qualified recipients.
More than 2 million borrowers qualify based on their payment and employment history, according to a December 2024 report from the Education Department.
After launching, approximately 99 percent of initial applicants were denied, according to U.S. Government Accountability Office data.
President Joe Biden’s administration introduced reforms—including a waiver that expired in October 2022 and other permanent modifications—meant to expand eligibility. They allowed borrowers to make lump sum or late payments to receive forgiveness.
Since becoming law, the program has erased approximately $74 billion in student loan debt for more than 1 million borrowers—primarily in the fields of public service, nursing, and teaching. Biden discharged student loan debt for individuals in other circumstances, as well.
He additionally sought to eliminate billions of dollars in other student loan agreements, but his efforts were upheld by a series of court decisions.