PSLF rule changes student loan borrowers should know about

While federal courts have blocked the Trump administration’s efforts to block eligibility for Public Service Loan Forgiveness, other recent changes still impact borrowers’ ability to take advantage of the program.

For example, a new repayment plan is not PSLF-eligible, and many parent borrowers may now be excluded from the program altogether. These changes stem from President Donald Trump’s Big Beautiful Bill Act, which overhauls the nation’s federal student loan system and is effective July 1.

PSLF, which President George W. Bush signed into law in 2007, allows some nonprofits and government employees to have their federal student loans canceled after 120 payments, or 10 years. More than 9 million debtors may be suitableThat’s according to a 2022 forecast from Conservation Borrowers, a nonprofit organization.

Here are the three latest updates to PSLF.

To qualify for PSLF, student loan borrowers must be enrolled. certain repayment plans.

Any time spent on one of the new plans created by OBBBA — Tiered Standard Plan— will not count toward your required 120 PSLF payment,” said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers. The Tiered Standard Plan comes with fixed payments spread over different timelines based on your total debt amount.

For new borrowers or those who took out loans after July 1, your only repayment option to qualify for PSLF is the new Repayment Assistance Plan. RAP is the U.S. Department of Education’s latest income-driven repayment plan, or IDR; This means borrowers base their monthly bills on a fraction of their income. Monthly payments under RAP typically range from 1% to 10% of your earnings; The more you do, the larger your required payout will be.

“This is especially important for anyone who borrows a new loan on or after July 1, 2026, because the Tiered Standard Plan is the default plan,” said Rich Williams, former deputy secretary of the Department of Education. “New borrowers who do not actively choose a plan are automatically placed there and quietly earn zero PSLF credit.”

Current student loan holders pursuing PSLF will have more repayment plans available, including an Income-Based Repayment plan, or IBR, said Nancy Nierman, deputy director of the Education Loan Consumer Assistance Program in New York, a nonprofit that helps borrowers navigate repayment. As a result, they should compare their monthly bills under their existing IDR plans and choose the cheapest option, he said.

Nierman added that you should generally ignore the forgiveness requirement in the IDR plan if you want your debt erased from PSLF. For example, RAP results in the erasure of debt only after 30 years.

But for PSLF borrowers, “this is a 10-year forgiveness path, no matter what plan you’re enrolled in,” he said.

Many parents who took out student loans for their children’s higher education no longer qualify for PSLF due to changes in OBBBA. This is because the law prevents Parent PLUS borrowers from accessing IDR.

“Parent PLUS loans no longer have a path to income-based repayment, or PSLF,” Williams said.

Primary borrowers who took out loans after July 1 are now only eligible for the Graduated Standard Repayment Plan, which is not included in PSLF.

Meanwhile, existing Parent PLUS loan holders will soon a short window to consolidate their debt and potentially maintain a way to enroll in an IDR plan. Consolidation of Parent PLUS loans to borrowers direct federal loan – the kind most students carry.

But experts say if you don’t, you lose access to IDR plans and therefore the benefits of PSLF.

Student loan borrowers may no longer have to worry about whether their employers will qualify for PSLF. That’s because two federal judges was shot in June Trump administration rule that would change the definition of “qualified employer” under PSLF to exclude entities that “engage in unlawful activities.”

Opponents of the policy said the vague language would allow the Trump administration to exclude nonprofits it dislikes.

“Management may appeal the decision, but they haven’t said anything since the rule was lifted,” Nierman said. he said. “And if they appeal, there’s no guarantee they’ll win.”

Recently, the Ministry of Education wrote It said on its website that it was trying to update the PSLF form to comply with the court order, but that “an employer’s certification that it has not engaged in illegal activities will have no effect.”

The best way to find out if your business qualifies for PSLF is to fill out the so-called form. employer certification form. Experts say it’s best to fill out this form at least once a year and keep records of your approved payments.