Cases & Developments

The Department of Education announced the launch of a new earnings indicator that will show prospective students average post-graduation earnings when completing the FAFSA application. The Department will be using existing Department data and if an institution’s average earnings are below that of the average high school graduate, FAFSA will generate a “low earnings” disclosure.

The Department of Education announced that the negotiators of the Reimagining and Improving Student Education (RISE) committee reached consensus on a definition of a professional degree. The committee agreed that the programs eligible for the higher loan cap would include medicine, pharmacy, dentistry, optometry, law, veterinary medicine, osteopathic medicine, podiatry, chiropractic, theology, and clinical psychology. The committee also reached unanimous consensus on other proposed changes to federal loans and repayment plans. More details can be found in this summary provided by the National Association of Student Financial Aid Administrators.

Complaint for Declaratory Relief. Plaintiffs, a group of cities, counties, nonprofit organizations and associations, sued the Department of Education and Secretary McMahon alleging the Department’s October 31, 2025 final rule on the Public Service Loan Forgiveness (PSLF) program is unlawful and violates the Administrative Procedure Act (APA). Plaintiffs contend that they face “direct, immediate, and seriously detrimental injury” because the final rule “forces them to engage in burdensome compliance activities, threatens to cause them economic harm through loss of talent and anticipated increased costs to their hiring and employee compensation, and . . . chills their protected speech.” Plaintiffs also argue that the final rule is arbitrary and capricious because it is based on “unsupported assertions [and] proposes to address a problem that it cannot substantiate.” Further, plaintiffs allege that the final rule violates the free speech rights of nonprofit plaintiffs and associational plaintiffs as it is overbroad and “not narrowly tailored to achieve a compelling government interest.” Finally, plaintiffs allege that the final rule violates due process and is void for vagueness because it does not provide “a sufficient basis to understand what conduct is actually prohibited.” Plaintiffs request that the court declare the final rule unlawful and unconstitutional, vacate it, and permanently enjoin defendants from implementing or enforcing it.

The Department of Education released its final rule on the Public Service Loan Forgiveness (PSLF) program, which amends the definition of “qualifying employer” to exclude organizations that engage in unlawful activities. The Department defines unlawful activities as those that have a substantial illegal purpose, such as supporting terrorism or aiding and abetting illegal immigration. If an employer is alleged to have engaged in illegal activities, they will be provided with a notice, a transparent record, and an opportunity to review, respond, and rebut the Department’s findings. The Final Rule goes into effect on July 1, 2026. The Department also released a fact sheet on the Final Rule.

The American Council on Education (ACE), on behalf of 44 higher education associations, sent a letter to the Department of Education (the Department) expressing opposition to the Department’s proposed changes to the Public Service Loan Forgiveness (PSLF) program. The proposed changes amend the program to exclude employers that engage in activities that have a “substantial illegal purpose” as defined by the administration and prohibits borrowers from requesting reconsideration of a qualified employer. The ACE letter states that the proposed changes are not aligned with the law or congressional intent and asks the Department to reconsider the proposal.