Student-Loan Borrowers Risk Losing PSLF Debt Relief in the New Year

Big changes are coming for a long-standing student-loan forgiveness program.

In 2007, Congress approved the Public Service Loan Forgiveness program, which is designed to forgive student debt for government and nonprofit workers after 10 years of making qualifying payments. It meant that student-loan borrowers who dedicate at least a decade of their careers to public service work could count on their balances eventually being wiped out.

President Donald Trump’s administration is changing the popular program, in which about 7 million borrowers are enrolled. At the end of October, the Department of Education finalized its rule to narrow eligibility for PSLF in response to Trump’s March executive order directing the education secretary to redefine what “public service” means.

A fact sheet from the department said that the rule will change the definition of a qualifying employer “to exclude employers that participate in illegal activities such that they have a substantial illegal purpose.”

The final rule is set to go into effect in July 2026, and some student-loan servicers that collect payments from borrowers in PSLF have said that nothing is changing yet, and borrowers will receive updates as the regulations go into effect.

“For now, there are no impacts to borrowers, payment counts, or discharges,” one servicer, Aidvantage, posted on its website.

The Department of Education said that the changes are intended to ensure that borrowers who receive PSLF have employers that contribute to public service and do not violate any laws. However, borrowers and advocates have expressed concerns that the changes to eligibility will block public servants from relief because their employers do not align with the administration’s political views.

“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,” Under Secretary of Education Nicholas Kent said in a statement.

What’s set to change for PSLF

The key change in the PSLF rule concerns eligibility for PSLF employers. While any public service employer previously qualified for the program, a fact sheet from the Department of Education said that it will be changing the definition of a “qualifying employer” to exclude employers that have participated in “substantial illegal activity,” which the department said includes actions supporting terrorism or gender affirming care.

If the department determines that an employer engaged in illegal activity, affected employers will be notified and receive an opportunity to rebut the department’s findings. Borrowers will also be notified, but they cannot appeal the findings themselves.

Should the employer be disqualified from PSLF, they can reapply to be a qualifying employer within 10 years, or they can enter a “corrective action plan” with terms agreed upon by the department. Once an employer is deemed ineligible, any payments borrowers make while under that employer will not count toward PSLF, but retroactive payments would continue to be valid.

Student-loan borrowers in public service raised concerns with the looming PSLF changes. Megan Flocken, a nonprofit worker, told Business Insider: “I’m counting my lucky stars that there’s still the possibility that this PSLF program will remain intact because I have dedicated my whole professional life to public service.”

Shortly after the department released its final rule, a coalition of advocates and nonprofits sued the administration, accusing it of violating the law and harming government and nonprofit recruitment. Some Democratic lawmakers also called for the rule to be rescinded; Sen. Bernie Sanders wrote on X on November 1 that the administration does “not have the right to take away student debt forgiveness from teachers, nurses, veterans and other public servants if they do not show loyalty to your right-wing political agenda.”