The U.S. Department of Education finalized a rule narrowing which employers qualify for the Public Service Loan Forgiveness (PSLF) program, saying organizations deemed to have a “substantial illegal purpose” — including alleged aid to illegal immigration or other activities the agency defines as unlawful — can be excluded from PSLF. The rule implements a March executive order and will take effect July 2026. Advocates and several groups signaled plans to sue, arguing the rule is a politicized reshaping of a program designed to forgive loans for government and nonprofit workers. The department said the change prevents taxpayer funds from subsidizing organizations that it believes contravene federal law; opponents counter that the new standard gives the agency broad discretion that could disqualify hospitals, legal services groups, and social‑service providers. Colleges and school districts that rely on PSLF to recruit teachers, counselors and public‑service staff face recruiting and retention uncertainty. Legal challenges could delay enforcement and create administrative burdens for campus HR and financial‑aid offices monitoring employee eligibility.