Judge Vacates Education Department Rules Barring Some Employers from Loan Forgiveness Program

A federal judge on Tuesday vacated changes the U.S. Education Department planned to make to the Public Service Loan Forgiveness program, halting the rules one day before they were set to begin. The decision came in response to lawsuits filed by more than 20 states together with nonprofit organizations and cities.

The suits argued that the new rules would allow political considerations to influence which employers could participate. Congress established Public Service Loan Forgiveness in 2007 to encourage graduates to take government and nonprofit jobs. Borrowers who work in qualifying public service positions for 10 years can have their federal student loans canceled.

The program has already forgiven loans for more than 1 million Americans. ” The rules would have given the education secretary authority to bar organizations involved in activities such as illegal immigration, support for terrorist groups, or what the department defined as “chemical castration,” including hormone therapy or puberty-delaying drugs.

The department estimated that fewer than 10 employers would be removed each year under the new standards.

The judge ruled that the Education Department exceeded its authority and that the changes could violate First Amendment protections. The opinion stated that the department cannot create new criminal prohibitions through rulemaking and questioned why broad new rules were needed when the department projected such limited enforcement.

The Education Department did not immediately respond to requests for comment.