Public Service Loan Forgiveness (PSLF) – New Eligibility Ruling

Posted by PA Association of Nonprofit Organizations (PANO) on September 2, 2025

On August 15, the Department of Education released proposed rules that could make certain nonprofits and public employers ineligible to participate in the Public Service Loan Forgiveness (PSLF) program starting July 1, 2026. Major legal challenges are likely to arise if the rules are published in their current form. However, if enacted as they stand, the new rules:

• Would allow the Secretary of Education to block PSLF eligibility for organizations determined to have a “substantial illegal purpose”.
• Would not strip existing PSLF participants of past qualifying payments; however, future payments would not count if an employer becomes disqualified.
• Could impact organizations offering a wide range of activities, including providing health care to transgender youth, facilitating the violation of federal immigration laws, violating state tort laws, or engaging in an activity that facilitates illegal discrimination.

Borrowers working for potentially affected employers are encouraged to:

• Submit PSLF Employment Certification Forms before the new rules take effect.
• Continue to maintain PSLF eligibility, as past payments cannot be revoked.