WASHINGTON – A proposal by the U.S. Department of Education would give the Secretary of Education unprecedented new authority to kick nonprofits and state and local governments out of the Public Service Loan Forgiveness Program (PSLF). If finalized, the rule threatens the millions of people who depend on services that government and nonprofits provide. Among those at risk are the low-income families and older adults across the country who rely on civil legal services organizations to protect their rights and basic needs relating to health, safety, housing, employment, disasters, and financial crises.

“The Department of Education’s proposed PSLF rule is unlawful, it is clearly unauthorized by Congress, and it threatens access to critical legal services for millions of low-income and working class people across the country,” said Abby Shafroth, managing director of advocacy at the National Consumer Law Center (NCLC). 

Under well-established, bipartisan law, all 501(c)(3) nonprofits and other nonprofits that provide legal services to low-income people are qualifying employers for the PSLF program, which offers student loan relief to people who work for 10 years at such employers. PSLF helps ensure that talented attorneys can afford to work  at civil legal aid organizations—which pay far less than the private legal sector. 

But the proposed new rule would end the assurance of legal services eligibility for PSLF. It would let the Secretary of Education kick employers out of the PSLF program based on the Secretary’s conclusion that the employer has engaged in activities with “substantial illegal purpose” related to immigration, discrimination, transgender people, terrorism, or certain laws associated with protest. In most cases, the Secretary could make this determination without any court finding of unlawful conduct, opening the door to removal of PSLF eligibility for activities that are legal but politically disfavored, politicizing the program and injecting significant new uncertainty into it.

“There are not enough legal services lawyers to meet the existing demand,” said Robyn Smith, attorney at Legal Aid Foundation of Los Angeles and of counsel to NCLC. “The proposed rule threatens to reduce legal aid capacity further by making it harder for legal services organizations to recruit and retain talented staff, and discouraging legal aid organizations from engaging in lawful and important work.” 

Over 70 legal services organizations that serve low-income people across the country submitted comments opposing the proposed rule, calling it unlawful and warning it would decrease access to legal services for low-income people. 

Related Resources

• Student Loan Borrower Assistance: Public Service Loan Forgiveness (PSLF)
• Student Loan Help Video Series, June 30, 2025
• Student Loan Toolkit, May 20, 2024