AccessLex Institute Submits Comments to Education Department on Changes to the PSLF Program

Tamy Abernathy
U.S. Department of Education
Office of Postsecondary Education
400 Maryland Avenue SW, 5th Floor
Washington, D.C. 20202

Re: Intent To Receive Public Feedback for the Development of Final Regulations Regarding the Public Service Loan Forgiveness Program

Docket Number: ED–2025–OPE–0016

Dear Ms. Abernathy:

I am writing on behalf of AccessLex Institute^® in response to the August 18, 2025 Federal Register notice soliciting comments on amendments to the Public Service Loan Forgiveness (PSLF) program authorized under Title IV of the Higher Education Act. The following comments focus on AccessLex Institute’s views regarding the Education Department’s (ED) legal authority to make the proposed changes, existing safeguards, and operational and administrative challenges.

AccessLex Institute, in partnership with its nearly 200 nonprofit and state-affiliated ABA-approved member law schools, has been committed to improving access to legal education and to maximizing the affordability and value of a law degree since 1983. We advocate for policies that make legal education work better for students and society alike; conduct research on the most critical issues facing legal education today; seek to expand access to legal education for underrepresented students through research, grantmaking, data analysis, and the dissemination of information and resources; and aim to increase first-time bar exam passage nationwide.

The PSLF program, created with bipartisan support in 2007 under the College Cost Reduction and Access Act, allows eligible Direct Loan borrowers employed by a government entity or qualifying nonprofit organization to have their loans forgiven after making 120 monthly payments.

On March 7, President Trump issued an executive order instructing the Secretary of Education to propose revisions to 34 C.F.R. 685.219 to ensure that the definition of “public service” excludes organizations that “engage in activities that have a substantial illegal purpose.”¹

It is clear that the PSLF program continues to actively encourage individuals to pursue and, perhaps more importantly, persist in public service careers that benefit communities across this country. This multi-decade record of success in achieving the policy goals envisioned by Congress is remarkable and uncommon. However, we believe that, due to the statutory limitations and existing protections described below, ED should withdraw the proposed regulatory changes.

Legal Authority

The Higher Education Act (HEA) defines “public service job,” in part, as one in: “…government (excluding time served as a member of Congress)…or at an organization that is described in section 501(c)(3) of title 26 and exempt from taxation under section 501(a) of such title.”² The statute is clear that all 501(c)(3) organizations, without limitation, and government entities are eligible employers for the purposes of PSLF.

While ED has the authority to interpret the statute through its regulations, it is not permitted under law to rewrite or ignore the plain language of the statute. And this is not a case of interpreting an ambiguous statute. Overriding the clear language of HEA would almost surely be deemed an unconstitutional overreach of executive authority. To be lawful, restricting eligibility as proposed would require Congress to amend the relevant provisions of the law.

We also find it troubling that the proposed rule appears to allow ED to penalize organizations or government employers (and importantly, their public servants) without judicial findings or due process when there is no conclusive evidence of wrongdoing, effectively creating and enforcing its own standard of legality outside the bounds of its jurisdiction. Moreover, the proposed rule introduces a troubling risk of political bias to a historically nonpolitical program. By granting ED the authority to exclude employers based on activities that may be lawful but politically disfavored by the then-current administration, the rule opens the door to selective enforcement, both now and in the future. In turn, this would serve to undermine the integrity, reliability, and public trust in the PSLF program, substantially eroding its value to the direct participants and the beneficiaries of their public service.

Existing Safeguards

The good news is that the administration’s concern with the potential for PSLF to support the federal government’s “subsidization of illegal activities” by allowing certain organizations to be qualifying employers under PSLF³ is already covered through the Internal Revenue Code (IRC). Specifically, the Illegality Doctrine provides that section 501(c)(3) organizations must not have an illegal purpose.⁴ If such organizations engage in illegal activities, the IRS, through the Tax Court, has the authority to revoke their tax-exempt status because the organizations do not serve a public purpose.⁵ Such a ruling, in turn, would make an organization an ineligible employer for the purposes of PSLF.

Because the IRS already has a standard and process in place to address illegal activity and purpose, the proposed rule would be duplicative. It would also be problematic for ED to apply legal standards that were designed for tax enforcement, not for determining eligibility for student loan forgiveness. This repurposing of the Illegality Doctrine into the PSLF context would create a parallel system of enforcement that lacks the appropriate oversight. Additionally, by establishing a new authority within ED to assess illegality using its own standards (likely different from IRS), the rule is a recipe for confusion and inconsistency.

This is compounded further by ED’s current operational limitations. Given ongoing efforts to reduce the Department’s scope, including staffing and budget cuts, and the existing backlog in PSLF processing, it is difficult to envision how ED could implement these new responsibilities effectively.

ED would first need to rehire or replace staff and secure increased appropriations that will be necessary for the technological upgrades, staff training, public outreach, and borrower education that will be required to implement the proposed changes. Without first addressing these needs, existing PSLF processing delays could worsen, new administrative responsibilities such as reviewing employer responses and notifying borrowers of status changes could be backlogged, and ED could be left unable to fulfill its existing statutory obligations.

Arbitrary and Capricious

In addition to being contrary to the statute and duplicative of the IRS’ role, the proposed rule is arbitrary and capricious. Under the Administrative Procedure Act, an agency’s rule may not be arbitrary and capricious,⁶ which the Supreme Court has said requires an agency to “examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made.”7 We believe that the proposed rule fails this test.

First, the cost of the rule does not justify the intended benefit. The rule estimates that ED will incur between $1.5 million and $3 million in administrative costs annually in the first two years; employers’ compliance costs will vary but could include legal representation, revised hiring practices and operational adjustments; and borrowers will face potential disruptions such as delayed forgiveness and confusion regarding the new rule. Meanwhile, ED believes that fewer than 10 employers would be impacted annually. These costs are unnecessary and excessive to prohibit merely 10 employers from being eligible under PSLF when the IRS already has procedures in place to strip such organizations of their tax-exempt status.

Second, the proposed rule would treat an employer’s failure to affirmatively check a box on the PSLF certification form as a declaration that the organization engages in “substantial illegal activity.” Such an approach ignores the fact that such an omission could occur for a number of unrelated, innocent reasons. In turn, it unfairly and unnecessarily imposes immediate and severe consequences on organizations without due process or evidentiary review, adding additional costs and efforts for all parties while adding no value for any party, resulting in a net negative for American taxpayers.

Finally, we are concerned that the proposed new delegation of power to the Secretary to make legal determinations in areas outside the Department’s jurisdiction, such as in matters of civil and criminal law, will lead to results that fail to provide PSLF stakeholders with clear guidance on whether an employer may or may not be eligible under the program.

For the foregoing reasons, we urge ED to withdraw its proposed rule and instead focus on strengthening the existing PSLF framework in ways that uphold the intent of the statutory language and prioritizing timely relief for borrowers. As you know, the PSLF program plays a vital role in supporting public service professionals who contribute meaningfully to our communities. We strongly believe that any changes to its structure must be grounded in law and implemented with care to avoid unintended harm to borrowers, employers, and taxpayers alike.

Thank you for considering our comments. If you have any questions or would like additional information, you can reach me at [email protected]. You can also contact Nancy Conneely, Vice President of Policy, at [email protected].

Sincerely,
Christopher P. Chapman
President and Chief Executive Officer
AccessLex Institute^®

¹ Exec. Order No. 14,789, 3 C.F.R. 202 (2025).
² 20 U.S. Code § 1087e(m)(3)(b).
³34 CFR §685.219(b).
⁴ Congressional Research Service. (2024). The Illegality Doctrine and 501(c)(3) Organizations (Report No. IF12739).
https://www.congress.gov/crs-product/IF12739.
⁵ Id. 
⁶ 5 U.S.C. §706.
⁷ Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins., 463 U.S. 29 (1983).