On June 30, 2026, in a victory for student borrowers and public services, a federal district court struck down the US Department of Education's (ED) rule allowing the US Secretary of Education to disqualify employers from the Public Service Loan Forgiveness (PSLF) program based on a determination that they have a "substantial illegal purpose."
Created in 2007, PSLF has long offered a promise to borrowers: if you make 120 qualifying payments while working full-time in a "public service job," you get your remaining federal student loan balance forgiven. The Higher Education Act (HEA) defines "public service job" to include jobs in government, emergency management, public education, and more, as well as any nonprofit, or 501(c)(3) organization.
In March of 2025, the Trump administration issued an executive order that attempted to redefine public service jobs. The Trump order was followed by an ED regulation redefining "qualifying employer" to exclude any organization the US Secretary of Education determined had engaged in one of six categories of conduct: aiding or abetting federal immigration law violations, supporting terrorism, providing certain gender-affirming care to minors, trafficking children across state lines for purposes of emancipation, a pattern of aiding and abetting illegal discrimination, or a pattern of violating specified state laws.
Under the final rule, which was slated to go into effect on July 1, 2026, employers would have to certify under penalty of perjury that they had not engaged in any of these activities. An employer that failed to certify, or that the Secretary determined had a "substantial illegal purpose,” would lose qualifying-employer status for 10 years or until the Secretary approved a corrective action plan.
Four nonprofit organizations sued the Trump Administration arguing that the rule violated the law, was arbitrary and capricious, was unconstitutionally vague, and chilled protected speech under the First Amendment. And last week, the court ruled that the Trump Administration's PSLF rule was illegal. It found that the text of the Higher Education Act says the Secretary shall cancel loan balances for borrowers employed in public service jobs, and it defines a 501(c)(3) job as a public service job without any carve-out for the Secretary to pick and choose among nonprofits based on their activities.
As a result, the rule is set aside nationwide, not just for the four plaintiff organizations.
What Does this Ruling Mean for PSLF?
At this time, the prior PSLF regulatory framework, which defines any nonprofit organization as a qualifying employer, remains in effect.
The Trump Administration has 60 days to appeal to the DC Circuit Court, and it's also possible ED could attempt a new rulemaking that tries to address the court's concerns or try to work with Congress on a statutory change. Given the strong support for PSLF, as evidenced by a recent bicameral resolution to repeal the Administration’s PSLF rule, it’s unlikely legislation restricting access to PSLF would pass Congress. We'll continue to track any appeal or subsequent rulemaking activity.
What Should Borrowers in Repayment Seeking PSLF Do Now?
The most important takeaway for student borrowers in public service jobs right now is that as long as you make 120 qualifying payments, you should be eligible for loan forgiveness under PSLF. If you're a borrower working toward PSLF, here's a short list of things to know and action steps to consider:
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Your employer's 501(c)(3) or public-service-sector status still qualifies you. Employment at any 501(c)(3) organization or in any of the public service sectors listed in the statute counts toward PSLF exactly as it did before the rule was proposed. You do not need to worry about your employer's activities disqualifying your payments under this rule.
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Keep certifying your employment as usual, on your normal schedule. ED recommends annual employer certification via the PSLF form. There's no need to rush a certification, but there's also no reason to delay certifying your employment if you normally would.
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Watch for the Trump Administration’s response to the ruling. ED may issue guidance clarifying how it will treat certifications submitted while the rule's status was in flux, or how it will handle certification during any appeal. Borrowers and employers should watch studentaid.gov, Student Defense, the Federal Register, or the National College Attainment Network's (NCAN's) Success Digest newsletter for updates.
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Document your qualifying payments and employment history now. Regardless of the litigation's final outcome, it's a good idea to keep records of employer certifications, pay stubs, and loan servicer correspondence, particularly given how frequently PSLF has changed in recent years.
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Talk to your loan servicer if your PSLF tracker shows any anomalies. If you saw your payment counts affected, reach out to your servicer or through the PSLF Help Tool at studentaid.gov. Given all the changes related to administration of federal student loans right now, it’s a good idea to stay on top of your tracker and reach out with any questions or concerns sooner rather than later.
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Stay engaged with your institution's or employer's HR or benefits office. Make sure your nonprofit or public-sector employer knows that the rule has been vacated and that they should continue certifying employment per usual, and sharing the benefits of the PSLF program with employees.
As always, NCAN will keep you updated as this issue develops.