Trump Administration Abandons Plan to Revamp Loan Forgiveness

WHO:

ABC News - The Trump administration, the Department of Justice, the U.S. Education Department, Education Secretary Linda McMahon, student-loan borrowers, public-service workers, advocates, nonprofit organizations, cities, and more than 20 states were involved in the dispute over the Public Service Loan Forgiveness program.

ABC News - Dan Zibel, an attorney for Student Defense, said the administration’s effort to weaponize the program was “anti-democratic and unlawful from the start” and called the outcome “a significant victory for millions of Americans who have dedicated their careers to public service.”

ABC News - U.S. District Judge Myong Joun in Massachusetts and District Judge Amir Ali in Washington issued rulings against the Education Department’s changes.

CBS News US - Advocates for student-loan borrowers said dropping the overhaul would benefit workers who dedicate themselves to public service.

WHAT:

ABC News - The Trump administration dropped two appeals challenging rulings that blocked its planned overhaul of Public Service Loan Forgiveness. The joint agreements said each side would pay its own fees; federal officials gave no explanation.

ABC News - The program forgives loans for qualified employees after a decade of payments and was designed to make jobs in government, public schools, fire and police departments, public hospitals, and nonprofits more attractive.

ABC News - The program has canceled loans for more than 1 million Americans.

WHERE:

ABC News - Judge Myong Joun’s ruling was issued in Massachusetts; Judge Amir Ali issued a similar ruling in Washington.

WHY:

ABC News - The lawsuits argued that the overhaul risked turning loan forgiveness into a tool for political retribution. Judge Joun ruled that the changes exceeded the agency’s authority and threatened First Amendment free-speech protections.

ABC News - The rule would have allowed Linda McMahon to remove employers from the program if she determined their work had a “substantial illegal purpose.” The article says it targeted employers supporting undocumented immigrants or transgender youth.

HOW:

ABC News - The administration’s rule was set to take effect in July before Judge Joun vacated the Education Department’s changes. The rulings responded to lawsuits brought by more than 20 states, nonprofit organizations, and cities.

CBS News US - Advocates said abandoning the plan would benefit workers dedicated to public service.

(UPDATED October 22, 2026 22:15 UTC)

The Trump administration has dropped two appeals challenging court rulings that blocked its planned overhaul of Public Service Loan Forgiveness. The program cancels remaining student debt for eligible employees after a decade of payments, helping attract workers to government, schools, emergency services, public hospitals and nonprofits; it has forgiven loans for more than 1 million Americans. The disputed rule would have let Education Secretary Linda McMahon remove employers she determined had a “substantial illegal purpose,” including organizations supporting undocumented immigrants or transgender youth. More than 20 states, cities and nonprofit groups sued, arguing the changes could turn loan forgiveness into political retribution. A judge in Massachusetts found the department exceeded its authority and threatened free-speech protections, while a Washington judge issued a similar ruling. Federal officials gave no explanation for ending the appeals, and each side will cover its own legal fees.