July 21, 2026
New PSLF Rules Blocked by Federal Courts: What Public Service Borrowers Need to Know
Public Service Loan Forgiveness (PSLF) borrowers were expecting major changes to employer eligibility rules beginning July 1, 2026. However, just before the new regulations were scheduled to take effect, two federal courts blocked the Department of Education’s rule changes.
For now, the existing PSLF rules remain in place. Borrowers who work for qualifying government or nonprofit employers should continue following their current forgiveness strategy while the legal process continues.
What Were the New PSLF Regulations?
In 2025, the Department of Education introduced new regulations that would have changed how an employer qualifies for the PSLF program. The changes were designed to allow the Department to review whether an organization had a “substantial illegal purpose.” Under the proposed rules, an employer could potentially lose PSLF eligibility if the Department determined that certain activities violated federal or state law. Because PSLF eligibility depends on the borrower’s employer, this change could have affected employees of organizations that previously qualified. A borrower could have continued making payments while working in public service, only to later find that their employer was no longer considered eligible for PSLF. The new rules were scheduled to take effect on July 1, 2026.Why Did the Courts Block the Rule?
Before the regulations could take effect, several groups challenged the rule in court. These groups included nonprofit organizations, public entities, and states. On June 30, 2026, two federal judges issued decisions blocking the Department of Education from implementing the new PSLF employer restrictions. The courts found that the Department had likely exceeded its authority by creating new limits on which organizations qualify as public service employers. One court also found that the rule raised First Amendment concerns because employer eligibility could have depended on the organization’s activities or viewpoints. As a result, the regulations did not go into effect on July 1 as originally planned.What Does This Mean for PSLF Borrowers?
The most important takeaway is simple: PSLF has not been eliminated, and the new employer restrictions are not currently being applied. For now:- Government employers and qualifying nonprofit employers continue to be evaluated under the existing PSLF rules.
- Borrowers should continue submitting employment certifications and tracking qualifying payments.
- Past qualifying PSLF payments remain part of a borrower’s forgiveness record.
Could PSLF Rules Change Again?
Although the courts blocked the new regulations, the issue may not be finished. The Department of Education may appeal the decisions or pursue additional regulatory action in the future. For now, however, the rule that would have changed employer eligibility is not in effect. For borrowers, this means staying informed remains important. Student loan rules continue to evolve, and legal decisions can affect how programs operate. However, it is equally important not to make decisions based on proposed or blocked changes. A regulation that has been stopped by the courts is not the same as a rule currently affecting borrowers.Staying Informed as PSLF Rules Continue to Evolve
The PSLF program has changed significantly since it was created, and borrowers have experienced frequent updates involving eligibility rules, repayment plans, and forgiveness processing. While the recent court decisions prevent the new employer restrictions from taking effect for now, borrowers should continue paying attention to future developments. Changes to PSLF rules, repayment plans, or Department of Education guidance can affect how borrowers reach forgiveness. The most important step borrowers can take is to understand their current status:- Confirm that their employer qualifies for PSLF
- Make sure they are enrolled in an eligible repayment plan
- Track their qualifying payment progress
- Keep records of employment and loan information
