Department of Education proposes new Rule on disqualifying organizations eligible for Public Service Loan Forgiveness

Today, the U.S. Department of Education published a proposed an amendment to existing regulations regarding the Public Service Loan Forgiveness program that would disqualify employees of “organizations that engage in activities that have a substantial illegal purpose.” Notably, the Rule states that new PSLF standard “align[s] directly” with the way in which the IRS is applying the Illegality Doctrine for assessing exempt status for 501(c)(3) organizations. 

Under the Rule, the Department of Education would be able to disqualify an employer if it the Department determines, by a preponderance of the evidence, that the organization “engages in activities that have the substantial illegal purpose” of: 

(i) aiding or abetting violations of 8 U.S.C. 1325 or other Federal immigration laws;

 

(ii) supporting terrorism, including by … by engaging in violence for the purpose of obstructing or influencing Federal Government policy;

(iii) engaging in the chemical and surgical castration or mutilation of children in violation of Federal or State law [which is defined to ban certain gender-affirming care];

(iv) engaging in the trafficking of children to states for purposes of emancipation from their lawful parents in violation of Federal or State law;

(v) engaging in a pattern of aiding and abetting illegal discrimination; or

(vi) engaging in a pattern of violating [specific] State laws [trespassing, disorderly conduct, public nuisance, vandalism, or obstruction of highways.]

Proposed 34 C.F.R. § 685.219(30). 

The Rule further provides “Nothing in this subsection shall be construed to authorize the Secretary to determine an employer has a substantial illegal purpose based upon the employer or its employees exercising their First Amendment protected rights, or any other rights protected under the Constitution.” The Rule is open for public comment until September 17. 

Of all of the many, many laws that an organization might violate, it is telling which the Administration selected as disqualifying, and which it didn’t. Curious that many other crimes–seditious conspiracy, say–didn’t make the list. 

-Joseph Mead