Trump's Student Loan Crackdown: Will Public Service Loan Forgiveness Be Slashed for Millions?

President Donald Trump's administration on 7 July unveiled plans to overhaul the Public Service Loan Forgiveness (PSLF) programme, triggering alarm among millions of public servants like teachers, nurses, firefighters, and others who have received forgiveness since the programme's inception in 2007.

PSLF allows eligible borrowers to have their student loans forgiven after 10 years of payments while working for government or qualifying non-profits.

With 43 million Americans holding £1.28 trillion ($1.7 trillion) in student debt, the proposed changes, which could disqualify certain employers, threaten financial relief for many.

Restrict Forgiveness Eligibility

The Trump administration's draft proposal empowers the Education Department to exclude organizations from PSLF if they engage in 'illegal activities', a term raising concerns for its vagueness.

Definitions include actions tied to immigration law violations, support for foreign terrorist organisations, or breaches of anti-discrimination statutes.

Alyssa Dobson, financial aid director at Slippery Rock University, warned that the rule could target 'entire cities and entire civil structures', potentially barring whole municipalities or non-profits from PSLF eligibility.

Such changes could affect over 2 million PSLF-eligible employers, disrupting loan forgiveness for public servants like educators and healthcare workers who rely on the program.

Ignite Borrower Anxiety

Public sentiment on X reflects deep concern. User @TheDaddyBottom warned: 'Trump is looking at overhauling the entire PSLF Program for student loans. This is for teachers, doctors, nurses, park rangers, etc.'

Similarly, @Larryferlazzo noted: 'Trump is reshaping a student loan forgiveness program. Some fear politics will decide who qualifies'.

These posts capture the unease among borrowers who fear politically motivated enforcement could jeopardize their forgiveness.

With only 670,000 borrowers receiving £36.8 billion ($50 billion) in forgiveness since 2017, administrative hurdles already plague PSLF.

Undermine Public Service Careers

The proposed changes stem from Trump's March 2025 executive order, which aims to ensure PSLF doesn't 'subsidize organizations that are breaking the law', per Acting Under Secretary James Bergeron.

Critics argue the Education Department lacks authority to redefine eligibility without Congressional approval, as PSLF was legislatively established.

Betsy Mayotte, president of The Institute of Student Loan Advisors, opposed the proposal, stating it's 'questionable, at best' whether the Department can strip eligibility from government or 501(c)(3) employers.

Borrowers like Tracey Blake, two years from forgiveness, fear 'the rug is going to be pulled out', risking their financial plans.

The rules could deter professionals from public service careers, exacerbating shortages in critical fields.

Expose Systemic Vulnerabilities

Beyond PSLF, the Trump administration's broader student loan agenda adds uncertainty. The Big Beautiful Bill, passed in July 2025, eliminates plans like SAVE and caps graduate loans at £80,000 ($109,000), increasing borrower burdens.

Efforts to transfer loan management to the Treasury Department, halted by a federal judge, signal further restructuring.

Kevin Thompson, CEO of 9i Capital Group, told Newsweek: 'Trump has made it clear how he feels about these programs, and he's likely to make it much harder for borrowers to access forgiveness'.

With 4.2 million borrowers over 90 days delinquent, defaults could spike, costing individuals thousands in garnished wages.

What Borrowers Should Do

Experts advise current PSLF borrowers to immediately print payment history from StudentAid.gov, submit employer certification forms to lock in eligibility before new rules take effect, and create spreadsheets tracking qualifying payments.

Those who have completed 10 years should submit buyback requests quickly, as experts believe 'the benefit is likely to be eliminated by the Trump administration.'

With the PSLF help tool, borrowers can search for qualifying employers and access certification forms, though the programme's future remains uncertain as the administration continues its systematic overhaul of federal student aid programmes.

While the administration claims to target illegal activities, the vague criteria risk politicised enforcement, potentially costing public servants like nurses or teachers their promised relief.