The new rules exclude rules adopted by nonprofits who have been engaged in inappropriate or illegal activities since receiving loan forgiveness.
The order directs the department of education and the Department of Finance to the faculty, according to White House officials.
“This move is needed to ensure that people who are engaged in these types of activities cannot benefit from programs that are not actually intended to support these types of activities,” White House secretary Will Scharff said during a meeting with Trump on March 7.
The order’s goal, according to the White House, is to protect America’s values and national security, while preventing organizations and their employees who take suspicious actions from benefiting from taxpayer-funded handouts.
Trump has targeted what he described as futile and inappropriate government spending since he took office for the second time.
He established the government’s efficiency department. This is being overseen by special government employee Elon Musk and is attempting to eliminate programs that are perceived as expensive and ineffective.
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The amount of loans that the new guidelines will affect is unknown.
Founded in 2007, the program was included in the University’s Cost Reduction and Access Act, and was signed into law by President George W. Bush to encourage the pursuit of public services careers by enabling student loan forgiveness.
Borrowers must qualify for the program for at least 10 years while employed by a particular nonprofit organization or federal, state, or local government. Forgiveness is provided tax-free to eligible recipients.
More than 2 million borrowers are eligible based on payments and employment history, according to a December 2024 report from the Education Department.
President Joe Biden’s administration has introduced reforms that expand eligibility, including exemptions and other permanent amendments that expired in October 2022. They allowed borrowers to make lump sum or late payments to receive forgiveness.
Since becoming law, the program has erased approximately $74 billion in student loan debt to more than 1 million borrowers in the fields of public services, nursing and education. Biden has also given up on student loan debt for individuals in other circumstances.
He also sought to eliminate billions of dollars in other student loan agreements, but his efforts were upheld by a series of court decisions.
