Trump order aims to deny student loan relief to some borrowers

WASHINGTON - President Donald Trump signed an executive order on Friday that orders changes to the Public Service Loan Forgiveness program. The order would disqualify workers of nonprofit groups from receiving the loan if they are deemed to have engaged in "improper" activities.

The executive order directs the Education Department to modify the program and it would exclude loan forgiveness to people whose work is tied to illegal immigration, foreign terrorist groups or other illegal activity, according to the White House. 

What does the order say? 

Dig deeper:

The Secretary of Education, in coordination with the Secretary of the Treasury, will propose revisions that can be made to the Public Service Loan Forgiveness Program, the order said.

"The PSLF Program also creates perverse incentives that can increase the cost of tuition, can load students in low-need majors with unsustainable debt, and may push students into organizations that hide under the umbrella of a non-profit designation and degrade our national interest, thus requiring additional Federal funding to correct the negative societal effects caused by these organizations' federally subsidized wrongdoing," the order reads. 

Under current rules, nonprofits are eligible if they focus on certain areas including public interest law, public health or education. Trump’s order appears to target those who work in certain fields at odds with his political agenda, including immigration. 

Updating eligibility rules typically requires the Education Department to go through a lengthy federal rulemaking process. Any new regulation that started this year would usually not take effect until 2027. 

The forgiveness program has been the subject of a political tug of war since Trump’s first term, when borrowers first started hitting the 10-year finish line.

What is the Public Service Loan Forgiveness program? 

The backstory:

Congress created the program in 2007 to encourage careers in the government or nonprofit groups. It offers to cancel any remaining student debt after borrowers make 10 years of payments while working in public service. It’s open to government workers, teachers, police, religious pastors and certain nonprofit employees, among others. 

More than 2 million Americans have eligible employment and open student loans, according to December data from the Education Department. 

The vast majority who applied for relief in 2017 were rejected because they were found to have enrolled in ineligible payment plans or failed to meet other criteria. An investigation by a federal watchdog group concluded the Education Department had failed to make the program's eligibility rules clear.