The Trump administration has dropped its appeal of a court ruling that struck down its rule limiting which employers qualify for the Public Service Loan Forgiveness (PSLF) program.

The Department of Justice and plaintiffs filed a joint stipulation Wednesday to dismiss the administration's appeal in Robert F. Kennedy Center for Justice and Human Rights v. McMahon, with each side bearing its own fees and costs, according to a court filing. The government also dropped a second appeal, and federal officials provided no explanation, reported the Associated Press.

What the PSLF Rule Would Have Changed

PSLF is a federal student loan forgiveness program created by Congress in 2007 to encourage graduates to work in government and nonprofit jobs. Eligible borrowers can have their remaining federal student loan debt canceled after making 10 years of qualifying payments while working in public service. The Trump administration had sought to tighten eligibility rules by allowing the Education Secretary to strip PSLF benefits from workers whose employers were deemed to have a "substantial illegal purpose."

Plaintiffs said the language targeted groups that support immigrants or provide gender-affirming care and threatened to disqualify as many as 2.5 million borrowers.

Court Rulings and the Department's Stance

Two lawsuits were filed in federal court in Massachusetts in 2025, one by a 22-state coalition and one led by the National Council of Nonprofits, with plaintiffs arguing the rule violated free-speech protections. In June, U.S. District Judge Myong Joun in Massachusetts vacated the rule, saying it overstepped the agency's power and threatened to violate First Amendment protections.

U.S. District Judge Amir Ali in Washington issued a similar ruling the same day in a case brought by nonprofits. Plaintiffs said the D.C. court struck down the rule in the Kennedy Center case.

After the June rulings, Under Secretary of Education Nicholas Kent said the department stood behind the policy and was evaluating next steps.

The Department of Justice, the Department of Education and Public Citizen did not immediately respond to MarketDash's request for comment.

Plaintiffs' Attorney Reacts to Dropped Appeals

Cormac Early, lead attorney for the plaintiffs in the D.C. case and an attorney for Public Citizen Litigation Group, said in a release: "The Trump administration never had a legal basis for politicizing the public service loan forgiveness program. Now, nonprofit and public service workers who support immigrant and other vulnerable communities can continue their work without the threat of retribution."