The NY State Bar Association just issued a warning: changes to the PSLF could “devastate” public sector legal services. If you’re counting on government loan forgiveness to get rid of your student debt, here’s what you need to know before July.
The rules change. Know where you stand before the ground shifts.–Steve Rhode
What will change on July 1, 2026
The Department of Education has established new rules that determine which employers are eligible for PSLF. From July 1:
- Assistance with violations of immigration law
- Providing certain gender-affirming care to minors (in some states)
- Activities that the government considers ‘illegal discrimination’
- Various other subjective criteria
The language is deliberately vague. Organizations that do work that is legal in their state can still be disqualified under federal interpretation.
Who is at risk?
Although the department estimates that fewer than ten employers will be disqualified each year, critics argue that the rules provide broad discretion to target:
- Immigration services organizations
- Healthcare providers that offer certain services
- Legal aid organizations
- Cities and provinces with certain policies
- Universities and colleges
Even government employees are not immune; cities that resist federal immigration enforcement could ban their workers.
What happens if your employer is disqualified?
This is the crucial part: Payments made AFTER disqualification do not count.
If you have made 100 qualifying payments and your employer is disqualified, those 100 payments are safe. But all future payments no longer count. You must find a new, eligible employer to continue your progress.
10 yearsFrom Public Service
July 1Rules come into effect
Legal challenges along the way
Several lawsuits have been filed:
- Attorneys general from more than a dozen states are challenging the rule
- Major cities (Boston, Chicago, San Francisco, Albuquerque) are suing
- Arguments that the rules conflict with Congress’s intentions
The outcome of these cases could change everything, but they may not be resolved before July 1.
What to do now
- Check the status of your employer. Use the PSLF Help Tool at studentaid.gov to confirm your employer’s current eligibility.
- Submit a labor certification form. Record your eligible payments to date.
- Understand your organization’s activities. Can your employer fall under the new criteria?
- Have a backup plan. Know which other employers in your field are eligible for PSLF.
- View the lawsuits. Court decisions can block or change the rules.
The bigger picture
When you pursue PSLF, you commit to 10 years of public service in exchange for loan forgiveness. That is an important interaction. The new rules add uncertainty to an already complex program.
Think carefully about your options:
PSLF still makes sense if…
- Your employer is clearly eligible (government, traditional non-profits)
- You have already made almost 120 payments
- Your loan balance is high compared to your income
- Regardless, you are committed to public service
Reconsider whether…
- Your employer is doing work that may be targeted
- You are early in the ten year timeline
- You have other debts that complicate your finances
- The uncertainty causes too much stress
Not sure how PSLF fits with your overall debt situation? Take the Find Your Path quiz to see all your options.
Key Takeaways
- PSLF rules change on July 1, 2026: Some nonprofits may be disqualified
- Payments made after disqualification do not count towards forgiveness
- Legal issues are pending but may not be resolved until July
- Verify your employer status NOW at studentaid.gov
- PSLF forgiveness remains tax-free (unlike IDR forgiveness)
- Have a backup plan if your employer may be in danger
Frequently asked questions
Does PSLF still exist?
Yes. The government loan forgiveness program still exists and will continue. What changes is which employers are eligible. Most government jobs and traditional nonprofits remain eligible. The new rules target specific activities that could disqualify certain organizations.
Do my previous PSLF payments still count?
Yes. Eligible payments made before an employer was disqualified will still count. You will not lose credit for previous payments. Only payments made AFTER disqualification will no longer count.
How do I know if my employer is at risk?
Review the disqualifying activities in the new rule. If your organization works in immigration services or certain healthcare areas, or has policies that may conflict with federal priorities, there is a potential risk. If in doubt, contact your HR department or a student loan advisor.
Should I give up PSLF?
Not necessarily. If you work for a government agency or traditional nonprofit without controversial activities, PSLF remains a valuable path to forgiveness. Evaluate your specific situation rather than making a blanket decision.
What should I do if I have student loans AND other debts?
Different rules apply to student loans and other debts. PSLF only applies to federal student loans. Credit cards, medical bills, and other unsecured debts have completely different options, including some that can eliminate them more quickly. Look at your whole picture, not just student loans.
(Source: NY State Bar Association)
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