New PSLF Rule Takes Effect July 2026

If you are a teacher, nurse, social worker, or public employee counting on PSLF to cancel your federal student loans after 10 years, pay attention to what is happening in Washington over the next few months.

A new rule is scheduled to take effect July 1, 2026. It does not change anything about you as an individual borrower. What it changes is whether your employer counts.

What the Rule Does

The U.S. Department of Education finalized a regulation that redefines which organizations qualify as "public service employers" under PSLF. Starting July 1, a government agency or 501(c)(3) nonprofit can be disqualified if the Education Department determines the organization has a "substantial illegal purpose."¹

The activities listed in the rule as potential grounds for disqualification include:

• Supporting terrorism or engaging in political violence to influence federal policy
• Aiding and abetting violations of federal immigration law
• Engaging in gender-affirming care for minors in violation of state or federal law
• Engaging in a pattern of illegal discrimination

The rule applies to government agencies and nonprofits alike.

Your past PSLF credit is not at risk under this rule. The Department says the regulation applies prospectively only — meaning any months of qualifying employment you have already certified still count, even if your employer is later disqualified. What changes is whether future payments qualify.

Congress Is Trying to Block It

On April 14, 2026, a bipartisan group of lawmakers introduced a Congressional Review Act resolution to overturn the rule before it takes effect. The resolution was led by Senators Tim Kaine (D-VA), Kirsten Gillibrand (D-NY), and Cory Booker (D-NJ), with companion House legislation from Representatives Joe Courtney (D-CT), Alma Adams (D-NC), and Scott Peters (D-CA).²

Critics argue the "substantial illegal purpose" language is vague enough to let a future administration disqualify employers based on political judgment rather than legal findings. Senator Kaine called the rule an attempt to "politicize and destabilize" a program that was created in 2007 and signed by President George W. Bush to reward teachers, nurses, police officers, firefighters, and other public servants.²

Once the CRA resolution reaches 30 Senate signatures, it can be called to a floor vote. Three federal lawsuits filed in November 2025 are also seeking to block the rule, with rulings possible before July 1.

Who Could Lose Future Eligibility

Hundreds of thousands of public-sector workers rely on PSLF. The risk under this rule is not that your past credit disappears — it is that you spend years working toward forgiveness and then learn that future payments no longer count because your employer was retroactively disqualified.

Workers most likely to be affected are employees of nonprofits that do immigration legal aid, gender health services, civil liberties advocacy, or other work that could fall under the new definitions. Government employees in states or municipalities with policies the current administration views as conflicting with federal law could also be at risk.

If you are five or more years into your PSLF track, certify all uncertified months now. Certified payments cannot be retroactively removed even if your employer is later found ineligible. Log in to studentaid.gov and submit any outstanding Employment Certification Forms before July 1.

What to Do Before July 1

Certify all uncertified employment months now

Log in to studentaid.gov and submit an Employment Certification Form for any months you have not already submitted. Your servicer will count and lock in those months. Do not leave credit uncertified heading into the effective date.

Download and save your payment count record

Pull a copy of your current PSLF payment tracking summary and keep it locally. If a dispute ever arises, you want documentation of your status before the rule took effect.

Watch the court cases and the CRA resolution

Legal challenges could block this rule entirely before July 1. Follow news from studentaid.gov and your loan servicer — if a court issues a preliminary injunction, the rule is paused. Do not assume it is blocked until you see an official announcement.

Assess your employer's risk profile

If your employer is a nonprofit doing work that could fall under the new language, consult with your HR department or an attorney familiar with student loan law. The rule gives the Department broad discretion, and what qualifies as "substantial illegal purpose" will likely be tested in court for years.

For more background on federal student loans and your options, read our guide to student loan forgiveness programs and our breakdown of federal vs. private student loans.

You should also know how the new RAP repayment plan replacing SAVE and PAYE changes your income-driven options, and what happened when the SAVE plan was eliminated earlier this year.

For broader financial planning context, see our FAFSA step-by-step guide and overview of average student loan debt by school type.

Footnotes

1. U.S. Department of Education. (2025). U.S. Department of Education Announces Final Rule on Public Service Loan Forgiveness to Protect American Taxpayers. https://www.ed.gov/about/news/press-release/us-department-of-education-announces-final-rule-public-service-loan-forgiveness-protect-american-taxpayers ↩

2. Office of Senator Tim Kaine. (2026, April 14). Kaine and Courtney Lead Bicameral Resolution to Repeal Trump Administration Rule to Politicize Public Service Loan Forgiveness Program. https://www.kaine.senate.gov/press-releases/kaine-and-courtney-lead-bicameral-resolution-to-repeal-trump-administration-rule-to-politicize-public-service-loan-forgiveness-program ↩ ↩²