Key provisions of President Donald Trump’s sweeping student-loan changes have landed in court.
While the administration’s new repayment plans and borrowing caps took effect July 1, other elements did not, including a narrower definition of a “professional” degree and limits to the Public Service Loan Forgiveness program.
That’s because for months, borrowers and advocacy groups have been fighting those changes in court. They argued that some of the administration’s student-loan plans are unlawful and are asking courts to pause implementation before blocking the provisions altogether.
The legal battles come as millions of federal borrowers brace for higher monthly bills, under the looming threat of default and its consequences, such as wage garnishment.
Where student-loan lawsuits stand
Borrowing caps for professional degrees
On June 24, US District Judge Beryl Howell blocked the Education Department from implementing its narrowed definition of a professional degree, which it had planned to roll out on July 1.
That definition would have allowed 11 programs to benefit from the higher $200,000 lifetime borrowing cap for professional degrees, while excluding programs like advanced nursing.
The ruling held that the administration’s plan was unlawful and would exacerbate the healthcare worker shortage.
Tyler Smith, the chief policy officer at the PA Education Association, a plaintiff, said that while the pause is encouraging, a final decision in the case is still pending, prolonging uncertainty for borrowers.
“It is a difficult time for applicants and programs who are trying to plan, who are trying to ensure that they have stable cohorts, that they’ll be able to complete their program,” Smith said.
As the case proceeds, the Education Department has released an updated list of programs that will meet the definition of a professional degree and qualify for the higher borrowing cap, including advanced nursing programs.
“These interim administrative designations are provided solely to facilitate implementation of the Court’s order and may change as litigation in the case proceeds,” the department’s guidance said.
Public Service Loan Forgiveness
One day before it was set to take effect, two federal judges blocked the Education Department’s rule to limit eligibility for the Public Service Loan Forgiveness program, which forgives student debt for government and nonprofit workers after 10 years of qualifying payments.
The rule, which the department finalized late last year, would have stripped PSLF eligibility from employers that the administration determined did not meet its “public service” definition, such as those that supported gender-affirming care.
The rule prompted lawsuits from nonprofits and advocacy groups that argued the rule was an overreach of the administration’s authority.
The courts agreed.
Winston Berkman-Breen, legal director at advocacy group and plaintiff Protect Borrowers, said the Education Department’s options are to appeal the ruling or move on, and he’s “confident that the program will continue as is.”
The rule was “arbitrary and capricious and doesn’t really provide enough rationale or clarity to folks,” Berkman-Breen said.
Undersecretary of Education Nicholas Kent said in a statement in response to the ruling that the department “stands behind this commonsense policy to ensure that taxpayer dollars are never used to subsidize illegal activities and is evaluating next steps.”
Kent also said during a summit at the department on July 7 that the Office of the Inspector General is conducting a “thorough review” of PSLF employers.
The SAVE Plan
The Trump administration announced a settlement that eliminated the SAVE plan — a Biden-era repayment scheme that allowed for cheaper payments — in March. Beginning July 1, servicers began notifying SAVE borrowers of their 90-day timeframe to transition to a new repayment plan, or be automatically moved to the most expensive repayment option.
There’s an ongoing lawsuit that’s pushing to stop the forced transition of SAVE borrowers to a different repayment plan. On June 23, the law firm Public Goods Practice asked a federal court to stop the department from involuntarily moving borrowers to a new repayment plan while the lawsuit proceeds.
The lawsuit argues that, with SAVE eliminated, the department must make the benefits of the earlier REPAYE plan available to borrowers. A department spokesperson disputed the claims in the lawsuit and encouraged borrowers to apply for the new Repayment Assistance Plan, which became available on July 1.
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