Trump's Justice Department quietly drops legal fight to overhaul student loan forgiveness program

The Trump administration on Wednesday (Oct 21) abandoned its legal battle over a sweeping rewrite of a widely used student loan forgiveness scheme. The Justice Department had challenged rulings issued in June, when federal judges sided with advocates who argued that the Public Service Loan Forgiveness (PSLF) programme was at risk of being turned into a lever for political payback. On Wednesday, it withdrew two appeals through single-sentence joint agreements under which each side bears its own costs. Officials offered no reason for the retreat that comes less than three weeks before the US midterms, in which cost of living is a major election issue.

Supporters of the programme meanwhile welcomed it. Dan Zibel, an attorney with the advocacy group Student Defense, said in a written statement that the administration's effort to bend public service loan forgiveness against organisations it disapproves of had been undemocratic and legally unsound from the outset. He described the outcome as a meaningful win for the millions of people who have spent their careers in public service.

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How the PSLF programme works

Public Service Loan Forgiveness was built to draw workers into government, public schools, fire and police departments, public hospitals and nonprofits by wiping out their loans once they had made payments for ten years.

That changed last year, when the administration drafted a rule handing Education Secretary Linda McMahon the power to remove employers from the scheme if she concluded their work served a "substantial illegal purpose."

The wording was loose, and its apparent targets were employers backing undocumented immigrants or transgender youth, a move that stood to hit borrowers working at schools, public hospitals and legal aid groups. The rewrite would have amounted to a fundamental remaking of a programme that has already erased the debts of more than a million Americans.

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The courts step in

Days before the rule was due to take effect in July, US District Judge Myong Joun in Massachusetts struck it down, finding that the Education Department had exceeded its authority and that the change risked breaching First Amendment free speech protections. His decision followed two lawsuits brought by more than 20 states, a coalition of nonprofit groups and several cities. District Judge Amir Ali in Washington reached a similar conclusion the same day in a separate case filed by nonprofit organisations.