Oregon sues Trump administration over new limits on loan forgiveness
A coalition of Democratic-led states has filed a lawsuit against the U.S. Department of Education, challenging recently finalized rules that restrict eligibility for the Public Service Loan Forgiveness (PSLF) program.
The program, created by the College Cost Reduction and Access Act of 2007 and signed into law by President George W. Bush, was designed to encourage Americans to enter public service by erasing remaining student debt after ten years of qualifying payments.
According to Oregon Attorney General Dan Rayfield, the PSLF program plays a crucial role in attracting and retaining public employees in the state.
“Public Service Loan Forgiveness helps recruit and retain many state employees,” said Dan Rayfield, Oregon Attorney General.
Between June 2024 and July 2025, almost 3 million Americans applied for loan forgiveness under the program, according to federal data.
In March, President Donald Trump signed an executive order directing the Education Department to revise the program. The changes include denying forgiveness to agencies and nonprofits that assist undocumented immigrants, provide gender-affirming care for transgender youth, or promote diversity and inclusion initiatives.
The Education Department finalized the new regulations on Friday. They are scheduled to take effect in July 2026.
Author’s summary
The lawsuit argues that the Trump administration’s new restrictions on the loan forgiveness program unfairly target organizations promoting inclusion and social support, potentially undermining public service recruitment.