Proposal defies congressional intent and undermines borrowers’ reliance on the program
WASHINGTON, D.C. — The Center for Responsible Lending (CRL) submitted a comment letter yesterday urging the U.S. Department of Education to withdraw its proposed changes to the Public Service Loan Forgiveness (PSLF) program.
The comment letter warns that the proposal would let the Education Department exclude otherwise eligible employers under a new, vague standard of “substantial illegal purpose.” The term is not defined in statute and, CRL argues, invites inconsistent interpretation and error, creating legal and policy risks that could unfairly harm borrowers.
PSLF forgives remaining federal Direct Loan balances after the borrower has made 120 qualifying payments while working full time for a qualifying public service employer. Congress defined eligible PSLF employers in the College Cost Reduction and Access Act of 2007 as government entities at every level, 501(c)(3) nonprofits and certain other public service organizations, such as child and family services, public health, education and law enforcement.
“This rule would add powers Congress never authorized and inject uncertainty into a program that millions rely on to plan their careers and finances,” said Jaylon Herbin, director of federal campaigns at CRL. “The proposal sets a dangerous precedent that the existing and future administrations could use to disqualify eligible employers for political or arbitrary reasons.”
Herbin emphasized that the changes undermine recruitment and retention in key public service roles and disproportionately affect marginalized communities.
“It also harms borrowers who are already burdened by student debt, many of whom are Black and brown, women and first-generation graduates, deterring talented individuals from joining nonprofit and government service. That means fewer professionals in classrooms and clinics, thinner staffing at senior centers and longer waits to reach a caseworker. The result is reduced access to essential services, especially in communities already carrying heavy economic burdens.”
As stated in the letter, CRL urges the Department to withdraw the rule or re-engage in the negotiated rulemaking process to develop a proposed rule that aligns with congressional intent.
“The Department should reaffirm Congress’s clear statutory definition of PSLF-qualifying employers and ensure that PSLF remains a stable, transparent and equitable program. Borrowers deserve certainty that the rules will not shift based on administrative discretion or political climate.”
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Press Contact: Vincenza Previte vincenza.previte@responsiblelending.org