Public Service Loan Forgiveness (PSLF) is a federal loan program that has proven invaluable to those pursuing work in public service (and the lower wages that often come with that career path). If borrowers work full-time for a qualifying employer for at least 10 years and make 120 monthly payments under a qualifying payment plan, the government forgives the remaining balance.
Although the One Big Beautiful Bill (OBBB), President Trump’s massive signature bill, didn’t make any changes to PSLF, it appears that the Trump administration is looking to make substantial changes to the program. On August 18, the Department of Education released its proposed changes to PSLF rules, which would impact millions of borrowers.
Here’s what you need to know:
PSLF Rules and Qualifying Employers
PSLF isn’t anything new. It’s been around since 2007, established during the presidency of George W. Bush when it had widespread bipartisan support. PSLF provided some financial relief to graduates who decided to pursue a career in public service.
Currently, a qualifying employer for PSLF includes:
- Federal. State, local, or tribal government agencies
- Non-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
- U.S. military service
- AmeriCorps or Peace Corps service
Only labor unions, partisan political organizations, and for-profit organizations are not eligible. But, it looks like that may change.
According to institutional lobbyists and student advocates, the proposed new rules would limit eligibility to organizations that align with the Trump administration’s focus.
The proposed rules say that it doesn’t want PSLF to support organizations that engage in unlawful activity. That sounds very simple and straightforward, but what the proposed rules describe as “illegal” activity is more complex.
Under the proposed regulations, organizations involved in the following would no longer qualify as eligible employers:
- Gender-affirming care
- Diversity, equity, and inclusion programs
- Support for Palestine
- Support for undocumented immigrants
- Participating in protests involving trespassing or disorderly conduct
With the proposed changes, borrowers working towards loan forgiveness would lose their eligibility for PSLF if their employer falls into one of the newly prohibited areas.
What This Means for Borrowers
The proposed changes are still in the early stages, but their impact could be substantial. According to Betsy Mayotte, president and founder of the Institute of Student Loan Advisors who also served on the advisory committee, these changes could have a chilling effect on graduates.
“I’m already seeing borrowers in a panic and wondering if they should leave their jobs because they work at a hospital that—even though it’s legal—performs gender-affirming care,” she said in a statement to Inside Higher Ed. “They’re worried about whether they’re going to have PSLF eligibility and wondering if they need to change their employers.”
If it goes into effect, it would not be retroactive; for existing borrowers working toward PSLF, they wouldn’t lose credit for their employment or payments prior to that effective date of the changes.
The proposal is open to public comment until September 17, 2025. Students and families can submit their thoughts on the changes to help affect the outcomes.
