Justice Department drops appeals over student loan forgiveness rules

The Justice Department has withdrawn two appeals that sought to restore restrictions on the Public Service Loan Forgiveness program, leaving the proposed rules blocked and current eligibility requirements in place. The department announced the decision on October 21, ending the administration’s challenge to two federal court rulings issued in June.

More than 2.3 million borrowers are pursuing forgiveness through PSLF, according to Education Department data cited in the announcement. The program allows eligible government and nonprofit employees to have remaining federal student loan debt forgiven after 10 years of qualifying public service employment and 120 monthly loan payments.

What restrictions were at issue

The proposed regulations would have allowed Education Secretary Linda McMahon to disqualify employers from PSLF if the department found their activities had a “substantial illegal purpose.” Possible grounds included assisting undocumented immigrants, providing gender transition care to minors and certain diversity, equity and inclusion activities.

The changes focused on employers rather than directly restricting individual borrowers. But employees of organizations deemed ineligible could have lost access to forgiveness because of their employer’s activities. The rules followed an executive order signed by President Donald Trump in 2025.

Nonprofit organizations, state and municipal governments, and labor groups challenged the regulations. They argued against the administration’s expanded authority over which employers could participate. Two federal courts struck down the revised requirements in June, and the Justice Department later appealed both decisions before withdrawing the appeals.

What the decision means for borrowers

With the appeals withdrawn, the proposed restrictions remain blocked and the existing framework for employer eligibility stays in place. The move preserves current rules; it does not change PSLF’s requirements for qualifying public service work and 120 monthly payments.

The decision does not mean that all 2.3 million borrowers pursuing PSLF have received forgiveness. The department did not announce a change to the program’s payment or employment requirements, and the appeals’ withdrawal leaves the existing eligibility framework intact.

This report draws on information from Beinsure: Insurance & InsurTech Media Market Intelligence Platform.