The Trump administration has finalized a rule to limit who can qualify for a federal student loan forgiveness program that has been a key incentive for attorneys to pursue public service and nonprofit careers.

The new rule published Friday in the Federal Register changes the definition of a "qualifying employer" in the Public Service Loan Forgiveness program. Critics of the change say it will politicize the program by letting the Department of Education disqualify groups whose views don't align with the administration's.

The shift is set to take effect July 1 and has already sparked vows of a court challenge. The change will let the Education Department exclude from the program employers it deems to be engaged in activities that "have a substantial illegal purpose."

Some legal organizations fear that groups that provide services to immigrants and transgender people, or that focus on issues such as racial equity, could be targeted.

In the published rule, the Education Department said that eligibility determinations "will not be made based on the political views or policy preferences of the organization." The agency said it expects fewer than 10 employers to be affected annually.

In a statement Thursday announcing the final rule, Under Secretary of Education Nicholas Kent said the PSLF program "was meant to support Americans who dedicate their careers to public service — not to subsidize organizations that violate the law, whether by harboring illegal immigrants or performing prohibited medical procedures that attempt to transition children away from their biological sex."

"With this new rule, the Trump administration is refocusing the PSLF program to ensure federal benefits go to our nation's teachers, first responders, and civil servants who tirelessly serve their communities," Kent said.

President Donald Trump had ordered changes to the loan program in an executive order in a March executive order.

Joshua Rovenger, the legal director at GLAD Law, which focuses on LGBTQ+ rights, called the new rule "an unlawful attempt to force organizations that are pushing back against the administration to stop doing that."

"The intent of this rule is to weaponize debt … to force organizations to act in a certain way, and to punish organizations and individuals who are doing work inconsistent with the administration's priorities," Rovenger said in an interview.

The loan forgiveness program was signed into law in 2007 by President George W. Bush. It lets people working for the government or nonprofit organizations have their student debt canceled after they have made 10 years of qualifying loan payments. More than 1 million people in various sectors have had student debt forgiven through the program.

In the legal world, the opportunity to take part in the program has been a selling point for legal aid groups, public interest organizations and legal employers in the government, as these jobs typically pay far less than positions at private law firms. The median amount of law school loans reported by young lawyers who borrowed for their education is more than $112,000, according to the American Bar Association.

"Given the cost of law school and undergraduate school right now, a lot of folks just don't have the ability to take these jobs absent the promise of Public Service Loan Forgiveness," Rovenger said. "When Congress enacted PSLF, the whole purpose was to encourage more individuals to go into public interest work, not just in the legal space, but more generally."

Michael Pillera, who directs the Educational Opportunities Project at the Lawyers' Committee for Civil Rights Under Law, called the rule change "bad for communities," saying it weakens what has been "a powerful tool for recruiting and retaining" people in jobs that serve the public, including those in education and the medical profession.

He said that the education secretary "does not have the expertise to assess what is illegal and legal under numerous contexts," adding, "that's not the function of the Department of Education," whose capacity has been diminished by recent mass firings.

"There are so many fundamental problems with this rule, so many ways in which it is unhelpful, it is harmful, and it exceeds the bounds of what statute has laid out for the role of the Department of Education," Pillera said.

Several groups said they will go to court to block the rule.

"This new rule is a craven attempt to usurp the Legislature's authority in an unconstitutional power grab aimed at punishing people with political views different than the administration's," the groups Democracy Forward and Protect Borrowers said in a statement, adding that they "will soon see the Trump-Vance administration in court."

Another organization, Student Defense, also said it will file suit, saying the administration "is playing political football with the financial well-being of people who have dedicated their lives to public service."

Those who support the rule change say it will protect taxpayer dollars. In a statement, House Education and Workforce Committee Chairman Tim Walberg, R-Michigan, said the program's "open-ended nature" has forced taxpayers "to foot the bill for employees at radical organizations that violate state and federal laws. "

"Aiding illegal immigration, supporting terrorism, or promoting child abuse through gender transitions is not 'public service,'" Walberg said.

Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit, urged borrowers not to panic over the rule change.

During federal rulemaking, Mayotte was the primary negotiator for consumer advocates, legal aid organizations and civil rights attorneys. She opposed the rule and said she does not think the Department of Education has the legal authority to disqualify employers from the program.

However, Mayotte said, borrowers should not make rash decisions, emphasizing the rule is likely to be challenged in court. She said she believes that if the rule survives a legal fight, it will affect only a small number of employers. In addition, the rule lays out a process under which borrowers would be notified "if their employer is being scrutinized in the first place," she said.

"I'm seeing borrowers making some really snap and panicked decisions over this rule, and it's really troubling," she said, explaining that since the change was proposed, some people have cashed out their retirement accounts to pay off their student loans because they fear their employers will lose eligibility.

Borrowers should stay aware of developments with the program, she said, but "nobody should be taking any action in regard to their student loan strategy as a result of the publication of this rule."

--Editing by Amy French.