The U.S. Department of Justice has withdrawn two appeals challenging federal court rulings that blocked new restrictions on the Public Service Loan Forgiveness program, leaving the disputed rule unenforced while a third appeal remains pending.
The decisions, filed Oct. 21, preserve the effect of court rulings that struck down the U.S. Department of Education’s effort to disqualify certain government and nonprofit employers from the federal loan-forgiveness program. The administration has not publicly explained its decision to withdraw the two appeals, according to the Associated Press.
Established in 2007, Public Service Loan Forgiveness (PSLF) allows eligible borrowers to have their remaining federal student loan balances forgiven after making 120 qualifying monthly payments while working for an eligible government or nonprofit employer. The program serves employees across sectors, including education, health care and public service.
The Education Department’s rule, finalized in October 2025, would have authorized the secretary of education to exclude employers whose activities were determined to have a “substantial illegal purpose.” The department identified activities related to immigration enforcement, gender-affirming care and other areas as grounds for potential exclusion.
The rule drew legal challenges from states, nonprofit organizations, unions and local governments. Plaintiffs argued that its provisions exceeded the department’s authority and could jeopardize loan-forgiveness eligibility based on employers’ activities and positions.
In June, federal judges in Massachusetts and Washington, D.C., struck down the rule in separate cases. The Massachusetts ruling found that the department had exceeded its statutory authority and that the restrictions violated constitutional protections. The Washington ruling also rejected the department’s authority to impose the changes.
The administration subsequently appealed the decisions. Its withdrawal of two appeals leaves those rulings in place, while a separate appeal involving a coalition of states remains pending, according to the National Association of Student Financial Aid Administrators’ litigation tracker.
For colleges and universities, the developments have implications both as employers and as institutions preparing graduates for careers in public service. Many higher education institutions are government entities or nonprofit organizations whose employees may qualify for PSLF. The program is also a consideration for graduates pursuing careers in education, health care, government and other qualifying fields.
The court decisions do not change the program’s existing eligibility requirements or guarantee that every employee or graduate qualifies for forgiveness. Borrowers must continue to meet applicable employment, payment and other program requirements.
The remaining appeal leaves open the possibility of further litigation over the administration’s proposed restrictions. Institutions and borrowers should continue to monitor developments and consult the Education Department’s official guidance for current program requirements.
