President Trump signed an executive order instructing administration officials to alter a student loan forgiveness program for public servants to exclude nonprofit organizations that engage in activities that have what he called a “substantial illegal purpose.”
His order to restrict the program appears to target groups supporting undocumented immigrants, diversity initiatives or gender-affirming care for children, among others, as the Trump administration has sought to eliminate federal support for efforts that have drawn right-wing ire.
The order, made public on Friday, is the latest of many attempts to overhaul the loan forgiveness program, which has often whipsawed borrowers with rule changes and bureaucratic obstacles.
The program, known as Public Service Loan Forgiveness, was created by Congress in 2007 and cannot be eliminated without congressional action, but the Education Department has some leeway to determine how it operates. Mr. Trump’s executive order directed the secretaries of education and the Treasury to amend the program to exclude workers for organizations supporting illegal actions, listing several categories of examples, including “aiding or abetting” violations of federal immigration law.
The Trump administration has taken a broad view of what it considers to be support of illegal activities. The order cited as examples organizations that support “illegal discrimination,” which the administration has previously said includes diversity and inclusion initiatives.
The order appeared to target groups supporting gender-affirming care. It said it would exclude from the loan forgiveness program any organization supporting “child abuse, including the chemical and surgical castration or mutilation of children.”
Mr. Trump’s order also singles out organizations that engage in a “pattern” of breaking state laws against “trespassing, disorderly conduct, public nuisance, vandalism and obstruction of highways,” language that could be used against groups that have supported political protests. Another provision targets those supporting “terrorism,” a label that Trump officials have used to describe anti-Israel protests.
Such changes must typically go through a formal rule-making process, which often takes months or years to complete and includes a period for public comment. But the Trump administration has frequently acted in defiance of apparent legal limits — which is likely to set off waves of anxiety for those relying on the complex program.
President George W. Bush’s administration enacted the loan program, which aims to encourage people to work in government and at qualifying nonprofits by easing their college debt burden. After making 120 monthly loan payments — which requires at least 10 years of service in qualifying jobs — borrowers become eligible to have their remaining federal student loan debt wiped out.
The program became a notorious quagmire, with bureaucratic tripwires and loan-servicing issues leading to a rejection rate as high as 99 percent for those who sought forgiveness. President Joseph R. Biden Jr.’s administration used waivers and exceptions to eliminate barriers, allowing more than one million people to use the program to eliminate debts totaling $79 billion.
An estimated two million people have made payments that count toward their obligation to be eligible for relief through the program. Those borrowers often anxiously count down the months until they reach the required 120 payments.
The program is open to borrowers who work in government jobs — at the federal, state or local level — and those who work at nonprofits that are tax-exempt under the Internal Revenue Service’s 501(c)(3) statute. Some other nonprofits are also eligible, but many are exempt, including labor unions and partisan political organizations.
At various points in the history of the loan program, there has been confusion over what constituted “public service.” In 2019, three lawyers won favorable rulings after having been deemed ineligible.
Mr. Trump’s order seems to take aim at disfavored organizations in a way that echoes a bill passed last year in the House that would allow the government revoke the tax-exempt status of nonprofit groups it accused of supporting terrorist entities. Democrats feared the bill could be exploited by Mr. Trump to target his political enemies. The bill stalled in the Senate.
Ron Lieber and Erica L. Green contributed reporting.
