Restoring Public Service Loan Forgiveness
March 7, 2025
Action Summary
- Purpose: Revise the Public Service Loan Forgiveness (PSLF) Program established in 2007 to ensure taxpayer funds support genuine public service, not organizations engaging in activities that undermine national security and American values.
- Program Abuses: The prior administration misused the waiver process to subsidize loans for employees who had not met the statutory requirements, misdirecting funds to activist organizations and creating disincentives for sustainable educational investments.
- Policy Change: The Secretary of Education, in coordination with the Secretary of the Treasury, is directed to propose revisions to 34 C.F.R. 685.219 to exclude organizations with substantial illegal purposes, including:
- Aiding illegal immigration or violations of immigration laws;
- Supporting terrorism or related violent activities affecting federal policy;
- Engaging in child abuse, trafficking, or harmful practices against children;
- Participating in patterns of illegal discrimination;
- Violating state tort laws through activities such as trespassing, disorderly conduct, vandalism, or obstructing highways.
- General Provisions: The order preserves existing agency authorities, is subject to availability of appropriations, and does not create enforceable rights or benefits against the United States or its agents.
Risks & Considerations
- The Executive Order aims to revise the Public Service Loan Forgiveness (PSLF) Program, potentially affecting individuals employed by organizations deemed to have a substantial illegal purpose. This could lead to stricter eligibility criteria for loan forgiveness, impacting those in public service roles.
- There is a risk that the redefinition of “public service” could exclude certain non-profit organizations from the PSLF Program, which may affect Vanderbilt University graduates who are employed in these sectors and rely on loan forgiveness as a financial relief mechanism.
- The focus on excluding organizations involved in illegal activities could lead to increased scrutiny and compliance requirements for non-profit organizations, potentially affecting partnerships and collaborations with Vanderbilt University.
- Changes to the PSLF Program could influence the career choices of Vanderbilt students, particularly those considering public service careers, as the financial incentives associated with loan forgiveness may be reduced.
Impacted Programs
- Vanderbilt’s Financial Aid Office may need to provide additional guidance and support to students and alumni affected by changes in the PSLF Program, particularly those employed in public service roles.
- The Office of Career Services might need to adjust its advising strategies to account for the potential impact on students’ career planning and financial considerations.
- Vanderbilt Law School and other departments with graduates entering public service fields may need to reassess the implications of these changes on their alumni and current students.
Financial Impact
- The potential exclusion of certain organizations from the PSLF Program could lead to financial strain for graduates who anticipated loan forgiveness as part of their financial planning.
- Vanderbilt University may need to explore alternative financial support mechanisms for students and alumni affected by the changes to the PSLF Program.
- There could be a shift in the demand for financial aid and scholarships as students reassess their career paths in light of the revised PSLF criteria.
Relevance Score: 3 (The order presents moderate risks involving compliance and potential impacts on student financial planning and career choices.)
Key Actions
- Vanderbilt’s Financial Aid Office should review and update its guidance on the Public Service Loan Forgiveness (PSLF) Program to ensure compliance with the new definitions of “public service” as outlined in the executive order. This will help students and alumni understand the implications for their loan forgiveness eligibility.
- The Office of Federal Relations should monitor the proposed revisions to 34 C.F.R. 685.219 and engage with policymakers to advocate for definitions and policies that align with Vanderbilt’s mission and values, ensuring that the university’s interests are represented in the regulatory process.
- Vanderbilt’s Legal Department should assess the potential legal implications of the executive order on university-affiliated organizations and ensure that none are inadvertently categorized under the new exclusions for PSLF eligibility.
- The Department of Political Science should conduct research on the broader societal impacts of the revised PSLF Program criteria, providing insights into how these changes might affect public service sectors and the university’s role in preparing students for these careers.
Opportunities
- The executive order presents an opportunity for Vanderbilt’s Public Policy Studies Program to engage in research and dialogue about the role of public service in national security and American values. This can enhance the program’s curriculum and attract students interested in these critical issues.
- Vanderbilt can leverage its expertise in law and public policy to host forums and workshops discussing the implications of the PSLF Program changes, positioning the university as a thought leader in the intersection of education, law, and public service.
Relevance Score: 3 (The order requires some adjustments to processes and procedures related to financial aid and public service definitions.)
Timeline for Implementation
N/A – The directive does not specify a timeline or deadline for implementation.
Relevance Score: 1
Impacted Government Organizations
- Department of Education: The order directs the Secretary of Education to revise the Public Service Loan Forgiveness program regulations, specifically excluding organizations that engage in activities deemed illegal under the criteria outlined.
- Department of the Treasury: The Secretary of the Treasury is to coordinate with the Department of Education in implementing the changes, ensuring fiscal and regulatory alignment.
- Office of Management and Budget (OMB): The order preserves the functions of the OMB Director, ensuring that budgetary and administrative proposals related to the order remain intact.
Relevance Score: 2 (A small number of Federal Agencies are impacted by this order.)
Responsible Officials
- Secretary of Education – Tasked with proposing revisions to the Public Service Loan Forgiveness Program regulations.
- Secretary of the Treasury – To coordinate as appropriate in the revision process.
Relevance Score: 5 (Directives affect Cabinet-level officials responsible for implementing significant policy changes.)