Richmond, Virginia—On August 18th, the Trump administration sent out new guidance to revoke Public Service Loan Forgiveness (PSLF) eligibility from a public service employer if the Secretary determines that the employer has engaged in activities with a “substantial illegal purpose.  This novel legal concept is a pretext to withhold funds from nonprofits engaging in protected activity with which the administration ideologically disagrees, such as work advancing immigrants’ rights, transgender persons’ rights, racial equity and inclusion, and peaceful demonstrations. While the IRS cannot, under this guidance, remove the organization’s tax exempt status, it would allow the Secretary of Education to circumvent existing IRS processes to eliminate the PSLF benefit for which these employers are eligible under federal law. This guidance from the administration is both unconstitutional and broadly illegal under federal law. It also attempts to dismantle non-profit organizations by deterring those with post-secondary education from seeking employment with non-profits, local government and other frontline organizations that work on large scale national challenges. It does this while harming millions of borrowers across the country, including those working to support historically marginalized communities. 

“This is a blatant and dangerous attempt by the Trump administration to weaponize student loan forgiveness against organizations doing the critical work of building a more just and equitable society,” said LaTwyla Mathias, Executive Director of Progress Virginia. “The Public Service Loan Forgiveness program was designed to support people who dedicate their careers to serving the public good: teachers, social workers, community organizers, and nonprofit advocates. Now, this administration is using a vague and ideological litmus test to punish those who challenge its agenda. This guidance is not only unconstitutional, it’s a direct attack on the very people and organizations standing up for immigrants, LGBTQ+ communities, racial justice, and democracy. Progress Virginia stands firmly against this abuse of power and will continue to fight for policies that protect public service workers and the communities they serve.”