Student Loans for Future Public Service Employees and Other Students

Student Loans are something Congress likes to mess with as an issue. The issue being, students are making off with millions or billions of dollars. Nothing could be further from the truth. Student loans will follow people till their death whether they can pay it or not.

Congress has no issues in troubling young students for the rest of their lives: Indeed in 2008-2009, A collapsing world credit markets and a slowing global economy combined to create the worst market in decades for production and sale of motor vehicles in the United States and other industrial countries.

Concern about the economic impact of a possible collapse of large parts of the U.S. automobile industry led both the Bush Administration and Members of Congress to seek legislative avenues to assist the automakers. Ultimately, General Motors Corporation (Old GM) and its successor General Motors Company (New GM) together received more than $50 billion in federal assistance through the U.S. government’s Troubled Asset Relief Program (TARP). The Role of “TARP Assistance in the Restructuring of General Motors.”

The much larger picture being how big is the student loan crisis? How bad are overall student loans in numbers outstanding? an approximate 43 million owing ~1.6 trillion? Check my math. Not all are delinquent. The issue here is bankruptcy after a number of years. It is not available for students, Biden was the only one to grant partial forgiveness. The latest . . .

Student Loans: Portfolio-by-Age.xls, Federal Student Loan Portfolio, Federal Student Aid

What is happening today is the Trump administration is taking a second look at student loans for the Public Service and questioning the forgiveness of them. More on the story below.

“Police, teachers, nurses could be denied loan forgiveness under Trump’s new rule, according to lawsuit.” CPR News

Colorado has joined 21 states in suing the U.S. Department of Education over changes to a student loan forgiveness program that gave government and nonprofit employees student loan relief after 10 years.

The Public Service Loan Forgiveness program promise since 2007? Work 10 years in public service (as a teacher, nurse, police officer, or domestic violence prevention worker for example) your loans are erased. The program was established with bipartisan support by Congress and signed into law by then-President George W. Bush. The program forgives borrowers’ remaining federal student loan debt after 10 years of qualifying public service and consistent payments.

From October 2021 to May 2024, 17,650 borrowers in Colorado had more than $1.2 billion in student loan debt discharged through the public service program, according to Education Department data.

A new federal rule lets the Secretary of Education unilaterally deny forgiveness if an employer engages in “substantial illegal purpose.” The administration gave a limited definition of “illegality,” such as activities that support undocumented immigrants, provide gender-affirming health care to transgender youth, engage in political protest, and promote diversity, equity, and inclusion efforts. For example, local first-responders could be denied loan forgiveness if their city has diversity, equity and inclusion policies, plaintiffs argue.

The rule takes effect in July 2026.

California, Massachusetts, New York and Colorado are co-leading the lawsuit. Attorneys general from those states argue the sweeping new rule could be used to punish states and organizations for activities like providing gender-affirming care or promoting diversity efforts.

Attorney General Phil Weiser argues the move is illegal and an affront to the legal promise made to public servants.

“To undermine this promise is appalling,” he said. “It’s bullying. It’s a political game. We’re not going to stand for it.”

In announcing the new rule Oct. 30, the U.S. Department of Education: “the eligibility requirements for what constitutes a qualifying public service employer, has not been adequately monitored. It is allowing certain organizations to qualify despite engaging in illegal activities that harm their communities and the public good. The Trump Administration is rightsizing the program to ensure that PSLF benefits go only to borrowers employed by organizations that genuinely serve the public.”

It said activities considered illegal include terrorism, trafficking, aiding and abetting illegal discrimination, and certain violations of state law.

But the coalition warns that the language of the new authority is vague and could mean that thousands of public workers could suddenly lose loan forgiveness eligibility through no fault of their own. They also worry it will cause fewer people to enter public service, leading to more staffing shortages, higher turnover and skyrocketing costs to maintain essential services.

The lawsuit asserts that the federal law doesn’t give the Department of Education discretion to carve out exceptions based on ideology and further argues that it gives the department unfettered power to target specific state policies or social programs while exempting federal agencies from scrutiny.

Weiser called the rule “an executive power grab, undermining the role of Congress.” He said it’s also an affront to federalism.

“We have employees who are protected by this loan forgiveness program. But what is this administration saying? That they can actually override states and their democratically elected decisions because the Education Department decides something might be illegal. That’s not the way our system works.”

 The states want the court to block the rule.

A group of private plaintiffs and cities, including Boston, Chicago, San Francisco and Albuquerque, also sued Monday to block the implementation of the new rule.