The New PSLF Rule Explained: Why It’s Dangerous for Public Service Borrowers (and What You Can Do Now)

When I started posting about Public Service Loan Forgiveness (PSLF), my goal was simple: to figure things out for myself and share what I learn to help others understand how this program really works—and how to protect ourselves when the rules shift.

In just 237 days, the federal Republican administration has managed to reshape PSLF in ways that could have lasting consequences for public service professionals across the country.

How Did We Get Here? A Recap of Federal Action in 2025

True to Project 2025’s mandate that the Republican administration “must quickly commence negotiated rulemaking” and propose the rescission of PSLF-related regulations, Republican administration certainly complied with this mandate. See The Heritage Foundation, Mandate for Leadership: The Conservative Promise 332 (2023), https://static.heritage.org/project2025/2025_MandateForLeadership_FULL.pdf.

In March 2025, the Republican administration issued an Executive Order directing the U.S. Department of Education (DoE or Department) to begin the process of changing the PSLF program.

On August 18, 2025, the Secretary of Education published a Notice of Proposed Rulemaking (NPRM), triggering a public comment process where individuals or organizations could weigh in on the proposed regulations. “13,989 parties submitted comments on the proposed regulations.” Public Service Loan Forgiveness (PSLF) Program; Final Rule, 90 Fed. Reg. (to be codified at 34 C.F.R. pts. 685, 686, 690, 691, 692, 694 & 695) (public inspection version Oct. 28, 2025), https://public-inspection.federalregister.gov/2025-19729.pdf. If you want to check out an example, here is a comment submitted on behalf of 254 organizations across the country.

Then, on October 30, 2025, the Department of Education issued a press release announcing that it has finalized the revising PSLF regulations. The Final Rule on PSLF becomes effective July 1, 2026.

You can read the new regulations here. For convenience, I’m including the Department’s “Summary” below:

“The Secretary establishes new regulations on the Public Service Loan Forgiveness (PSLF) program in the William D. Ford Federal Direct Loan (Direct Loan) program under 34 CFR 685.219 by adding or clarifying provisions to exclude employers that engage in specific enumerated illegal activities such that they have a substantial illegal purpose, including defining obligations and processes tied to making such a determination of an employer, clarifying that borrowers will receive full credit for work performed, until the effective date of the Secretary’s determination that an employer is no longer a qualifying employer under the rule; and establishing methods for an employer to regain eligibility following a determination of ineligibility by the Secretary. These regulations ensure that taxpayer dollars are not misused by preventing PSLF benefits from going to individuals employed by organizations that have a substantial illegal purpose. The revisions strengthen accountability, enhance program integrity, and protect hardworking taxpayers from shouldering the cost of improper subsidies granted to employees of organizations that undermine national security and American values through criminal activity.”

Public Service Loan Forgiveness (PSLF) Program; Final Rule, 90 Fed. Reg. (to be codified at 34 C.F.R. pts. 685, 686, 690, 691, 692, 694 & 695) (public inspection version Oct. 28, 2025), https://public-inspection.federalregister.gov/2025-19729.pdf.

What’s Changing Under the New Rule

Unfortunately, the federal government has now given the US Secretary of Education broad new authority to disqualify entire employers from PSLF if they are found to have a “substantial illegal purpose.”

That may sound harmless at first—until you read the rule in its entirety, or at least the section titled, “SUMMARY OF THE MAJOR PROVISIONS OF THIS REGULATORY ACTION.”

Under the amended regulations, an employer can lose its status as a qualifying employer for PSLF purposes if the Department determines that the organization has engaged in a “substantial illegal purpose.” This rule defines this broadly to include categories such as:

Aiding or abetting violations of federal immigration law;
Providing or facilitating gender-affirming care; or
Maintaining a pattern of illegal discrimination.

If an employer is disqualified, every employee working under that employer’s tax ID (EIN) immediately loses eligibility to earn PSLF credit going forward—even if they’ve spent 8 or 9 years faithfully making PSLF-qualifying payments.

Borrowers may retain credit for past qualifying payments towards PSLF, but would need to find a new qualifying employer to continue working toward PSLF forgiveness.

The Department claims this rule “protects taxpayers.” In reality, it exposes thousands of public-service professionals—teachers, social-workers, health care professionals, and lawyers (like me!)—to the risk of losing years of progress because of political or ideological targeting of their employers.

Why This Is So Dangerous, Confusing, and Enraging

It politicizes PSLF.

This rule gives federal officials discretion to decide which nonprofits or government agencies qualify for PSLF based on alleged “illegal purpose.” That’s a loaded phrase, and it can be weaponized against organizations providing services that are politically unpopular but completely lawful—like immigrant-rights advocacy, reproductive healthcare, or gender-affirming care.
Borrowers bear a large risk–and so do employers who may lose out on a subset of the talent pool.

If your organization is flagged, you lose PSLF eligibility. You could suddenly find yourself working at a non-profit or government job that no longer qualifies for forgiveness. This puts many of us in an impossible position: stay in jobs we love and that align with our purpose, or leave to avoid being on the hook for a massive amount of student loan debt we believed would one day be forgiven.

Employers suffer, too. Some nonprofit organizations and government agencies advertise PSLF eligibility as a benefit of employment. It’s often a key recruitment and retention tool, helping them attract mission-driven professionals and retain them for years. If PSLF eligibility becomes unstable or politically influenced, these employers could lose highly qualified staff who simply can’t afford to stay.

It discourages service in the very fields PSLF was meant to support.

Health centers, legal aid organizations, and youth-serving nonprofits—especially those serving marginalized communities—are among the most vulnerable. The rule chills the exact kind of public service Congress intended to strengthen.
It undermines trust and equity.

Once again, borrowers—disproportionately first-generation professionals, women, and people of color—are left holding the uncertainty. The rule even admits it will reduce forgiveness payouts by about $1.6 billion over the next decade.

“The Department estimates the net budgetary impacts to be -$1.616 billion from reductions in transfers from the Federal Government to borrowers who no longer receive credit toward loan forgiveness under PSLF.”

That’s money the Department expects not to forgive.

It is hypocritical.

The U.S. Department of Education (DoE) has laid off nearly half its staff this year, putting into question its ability to carry out its existing functions–including the investigation and enforcement of civil rights complaints–efficiently and impartially. Yet, this new rule expands the Department’s responsibilities:

“For the Department, the rule introduces new administrative responsibilities that include reviewing employer conduct, issuing determinations, notifying borrowers of status changes, and entering into and overseeing corrective action plans.”

Public Service Loan Forgiveness (PSLF) Program; Final Rule, 90 Fed. Reg. (to be codified at 34 C.F.R. pts. 685, 686, 690, 691, 692, 694 & 695) (public inspection version Oct. 28, 2025), available at https://public-inspection.federalregister.gov/2025-19729.pdf.

6. This is a stressful–and, hopefully, futile–exercise.

PSLF was enacted by Congress, and the regulations that implement it reflect congressional intent: that employment with public agencies or nonprofit organizations qualifies a borrower for loan forgiveness. These new regulations are a political ploy— concocted by Project 2025 and enacted by a Republican administration.

The public comment process didn’t yield any meaningful changes to the proposed rule. In fact, the Department itself admits that there were no revisions in response to 78 different issues raised by the public. Under “Changes,” the Department’s summary response simply says: “None.”

I expect that there will be legal challenges. While there may be an early, facial challenge to enjoin implementation of the regulations, additional lawsuits could follow once a first wave of borrowers are denied PSLF forgiveness because the Department deems their employer to have engaged in an alleged “illegal purpose”–when that isn’t the case.

I will remain hopeful that justice will prevail.

What You Can Do If You’re Pursuing PSLF

I know how exhausting this is. I’m reading through the Final Rule and I’m so frustrated that we’ll have to anxiously wait and see how the new regulations are implemented in 2026. Like many of you, I’ve been working toward PSLF forgiveness for many years and I’ve done my part to ensure I qualify for forgiveness after 120 payments. Yet, here we are again, navigating uncertainty created by shifting politics and regulatory overreach.

But here’s what we can do in the meantime to protect ourselves, stay informed, and prepare for whatever happens next:

Certify your employment every year.

Submit the PSLF Employment Certification Form through studentaid.gov and keep digital copies. If your employment with a specific employer before July 1, 2026 is ever questioned, you’ll have documentation showing your qualifying service period–assuming the Department honors it as it claims it will.
Download your full loan data.

From your StudentAid.gov dashboard, download “My Aid Data” and save it to multiple places. It’s not the easiest document to read, but it’s your official record of your federal student loans so also your strongest evidence if there are any disputes or servicing errors.

Avoid major changes without guidance, if you can.

I was recently reminded by a counselor that consolidating loans can erase progress. Before making changes to your repayment plans or anything else with regard to your federal student loans, consider consulting a free counselor, such as through the California Student Loan Empowerment Network if you are a California resident, or a trusted consumer attorney who can review your specific circumstances.
Stay informed—and skeptical.

Follow credible reporters like Adam Minsky (Forbes) and borrower advocacy groups such as the Student Borrower Protection Center and the Debt Collective. I would avoid relying solely on loan-servicers for information–they’ve been known to give inconsistent, incorrect, or incomplete guidance.
Document everything.

Keep PDFs or screenshots of every communication with your servicer, your payment history, and your PSLF tracker (if it remains available online). If something changes, you’ll need a paper trail. I also maintain a spreadsheet to log every payment date, payment amount, and note any special circumstances (like months that counted under the CARES Act pause).
Advocate and vote, if you can.

PSLF was created by Congress and its spirit should be honored through its implementing regulations. Public-interest professionals must continue to raise awareness that this rule hurts the very people who keep our communities running. We need elected officials who value and protect the public-service workforce, not policies that punish it.

Final Thoughts

For years, PSLF has been a promise—a lifeline that told us, If you dedicate a decade to public service, we’ll relieve your debt. But with these new regulations, that promise feels conditional, fragile, and politicized.

Still, I refuse to lose hope. PSLF was created by Congress, and its purpose remains clear: to reward those who dedicate their careers to public service. These new rules may create confusion and anxiety, but they cannot erase the collective power of informed, organized, and resilient borrowers who refuse to give up. In this regard, I’m encouraged by the leadership of the American Federation of Teachers, which has taken legal action to defend borrowers in federal loan repayment programs.

If you’re pursuing PSLF, stay focused, stay prepared, and stay connected. Document your progress, verify your employment, and use the resources available to you. And most importantly–keep advocating. The future of PSLF depends on our continued attention, our voices, and our persistence.

Disclaimer

Although I am a lawyer, nothing in this post—or anywhere on this website—constitutes legal advice. The information shared here is for educational and informational purposes only and should not be relied upon as legal advice. Every borrower’s situation is unique. For personalized guidance, consult an attorney, financial counselor, or qualified student loan advisor familiar with your individual circumstances.

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The New PSLF Regulations Explained: Why It’s Dangerous for Public Service Borrowers (and What You Can Do Now)