The Slow Demise Of Public Service Loan Forgiveness

Forbes

a day ago

Public Service Loan Forgiveness (PSLF) was created through the College Cost Reduction and Access Act of 2007 and is designed to provide loan forgiveness to individuals who work in public service.
The program allows federal student loan borrowers who work in government or for nonprofits to have the remaining balance on their student loans forgiven after making 120 qualifying payments - 10 years. To be a qualifying payment, a borrower must work for a qualifying employer, make payments under a qualifying repayment plan, and send in a certification of their employment.
Since PSLF was created by law, it cannot simply be ended without Congress passing a new law. However, over the last year, there have been consistent attempts to weaken the program. And it's sparking concern for the future.
While PSLF remains on the books, these administrative actions and policy changes are slowly narrowing the scope of the program.
Parent PLUS Borrowers Lose Access After 2026
One of the most significant changes to PSLF is the treatment of Parent PLUS Loans. Under current rules, parent borrowers can qualify for PSLF if they consolidate their Parent PLUS Loan into a Direct Consolidation Loan and enroll in the Income-Contingent Repayment Plan (ICR).
However, the One Big Beautiful Bill Act (OBBBA) ends this path in 2026. New parent PLUS Loans taken out after July 1, 2026 can only repay their loans under the Standard Repayment Plan - cutting off access to a qualifying repayment plan for PSLF.
Existing Parent PLUS Loan borrowers may still qualify if they take certain actions before June 30, 2026. They must consolidate their loans and have the consolidation completed before June 30, 2026. They must also enroll in (and make at least one payment under) an income driven repayment plan prior to July 1, 2028.
There's also a big catch: parents cannot take out a new Parent PLUS Loan again after July 1, 2026 or else all their existing loans will lose access.
This puts roughly 3.5 million parent PLUS loan borrowers at risk of losing access to PSLF, according to the most recent Federal Student Aid data.
Negotiated Rulemaking Could Change Qualifying Employers
While the changes to Parent PLUS Loans are already in effect, there's also a potential change coming to the definition of a qualifying employer. The Department of Education recently released their final rule to add a new qualification to qualifying employers: they cannot engage in "substantially illegal purposes".
While the headline sounds fair, the actual scope of the rule is creating a lot of concern. The term "substantial illegal purpose" is defined to include:
The end arbiter of which employers fall into these categories is the Department of Education.
There could also be collateral damage from these definitions. As the Department noted in their final rule, some employers use the same EIN for a variety of organizations - all of which would be subject to losing access to PSLF if one employer is found in violation.
As such, many worry that PSLF could become a political tool.
New Policy Memo For The Future
Finally, a think tank is advocating that Republicans take up a new budget reconciliation process and finish what the OBBBA started. One of 'asks' in the memo is the dismantling of the Public Service Loan Forgiveness program.
It's important to note that this memo isn't law, and it doesn't appear to have any official support yet in Congress, but it's clear that there are some organizations that are looking to end the PSLF program.
Bigger Picture: Will Public Service Loan Forgiveness Exist In Name Only?
Since PSLF was created by law, it cannot be dismantled overnight by executive orders, rulemaking, or budget reconciliation bills. However, the continual addition of exclusions and pending changes raise an uncomfortable question: what does Public Service Loan Forgiveness mean if borrowers can't actually qualify?
For public service employees like teachers, police officers, firefighters, and members of the armed forces, PSLF was designed as an incentive to remain in lower-paying but socially valuable jobs. By narrowing the scope of eligibility, policymakers are weakening that incentive and potentially discouraging participation in fields that are already facing shortages.
It's important to remember that Public Service Loan Forgiveness is not gone. It's also not going anywhere in the near term. Congress would have to repeal the statute to eliminate it completely.
But the slow march of administrative changes suggests a different kind of ending: one where the program exists on paper but serves fewer borrowers each year.