What Student Loan Borrowers Pursuing PSLF Should Expect in the Coming Months

Student loan borrowers pursuing relief through Public Service Loan Forgiveness (PSLF) are understandably on edge. New regulations proposed by the Trump administration could establish significant restrictions for relief under the PSLF program. Major changes to federal student loan repayment plans are underway. And new limits on borrowing and access to key federal programs are set to go into effect later in 2026.

Taken together, despite historic rates of approval, the PSLF program can feel like it’s under siege. The good news for borrowers is that, for now at least, student loan forgiveness through PSLF remains intact and is still happening. And borrowers can still take steps to access the program. 

Here’s a breakdown of what borrowers pursuing PSLF should be on the lookout for in the coming months.

Three lawsuits challenge new PSLF rules restricting student loan forgiveness

There are now three separate pending lawsuits challenging the Trump administration’s proposed new restrictions on PSLF. The Education Department’s new rules, if enacted, would allow the administration to cut off entire organizations from PSLF eligibility if the department determines that their activities have a “substantial illegal purpose.” 

Trump administration officials have argued that the rules are necessary to ensure that taxpayers aren’t funding illegal activities by subsidizing improper student loan forgiveness. Critics contend that the regulations are illegal and would allow the administration to punish nonprofit organizations and entire city and state governments for engaging in legal actions that officials simply disfavor.  

“Since inauguration, the Trump-Vance administration has baselessly accused law abiding people and organizations of being engaged in ‘illegal’ activities if those activities are at odds with the administration’s agenda—from accusing peaceful protesters of being engaged in terrorist activity to claiming that organizations that help provide food and basic services to immigrants are breaking the law,” said the National Council of Nonprofits in its Complaint filed against the Department of Education last month. 

“Defendants’ new eligibility requirements are unlawful in both method and goal. The Rule violates the Administrative Procedure Act because it is contrary to and exceeds the statutory authority granted to the Department under the Higher Education Act, which establishes that all government and 501(c)(3) employers are eligible for the PSLF program without limitation and confers no authority on the Secretary to disqualify any of them; it is arbitrary and capricious; and it contravenes fundamental constitutional principles of free speech and due process.”

Now that the legal challenges have been filed, the likely next step would be for the Plaintiffs (which, depending on the specific lawsuit, include various nonprofit organizations, municipalities, and state governments) to file a motion for a preliminary injunction. 

This is a formal request that the court block the proposed PSLF rules before they go into effect. The organizations would need to demonstrate that they will be imminently harmed without a preliminary injunction; they argue that the restrictions on student loan forgiveness are already having a chilling effect on hiring and retaining employees. It will be up to a judge to determine whether they have met the high standard for a preliminary injunction. 

If a court rules in favor of the Plaintiffs, the Education Department will almost certainly appeal. If the rules are ultimately allowed to go into effect, they will go live on July 1, 2026, after which the department can start taking steps to disqualify organizations from being eligible for student loan forgiveness under PSLF. However, the regulations do not allow the department to claw back any PSLF credit already earned by borrowers prior to an adverse determination.

Major changes to student loan repayment will impact PSLF borrowers

Student loan borrowers pursuing PSLF are also facing a number of potentially significant changes to federal student loan repayment in the coming months. 

PSLF requires that borrowers make 120 “qualifying payments,” the equivalent of 10 years. For a payment to be considered “qualifying,” it must be made on Direct federal student loans under either a 10-year Standard plan or an income-driven repayment (IDR) plan, while the borrower is engaged in full-time qualifying PSLF employment. Since the 10-year Standard plan pays off federal student loans in full at the end of 10 years, most borrowers effectively must be in an IDR plan.

There will be a cascade of changes to IDR plans over the course of the coming months:

• As soon as next week, the Department of Education and a coalition of Republican-led states are expected to file a major update in the lawsuit challenging the legitimacy of the (Saving on a Valuable Education) SAVE plan, the newest IDR option created under the Biden-Harris administration. And that update could include a settlement. While the details of any such settlement are not yet clear, a resolution of the lawsuit that effectively ends the SAVE plan could force millions of borrowers out of the ongoing administrative forbearance associated with the SAVE plan litigation, at which point they would have to select another IDR plan (likely with higher monthly payments). The SAVE plan forbearance period has not been counting toward student loan forgiveness for IDR plans or for PSLF.
• By the end of the month, the Education Department may have removed the “partial financial hardship” requirement for the Income-Based Repayment (IBR) plan, as mandated by the One Big, Beautiful Bill Act. This may allow more higher-income borrowers to switch into IBR (for example, those leaving the SAVE plan forbearance).
• Starting next summer, borrowers who take out any new federal student loans or consolidate their existing student loans via the Direct loan program will be cut off from all current IDR plan options. Their only IDR option will be the new Repayment Assistance Plan (RAP), which is expected to launch at around that same time.

Anticipated updates on PSLF buyback expected soon

The new PSLF Buyback program, which allows borrowers to make a one-time lump-sum payment covering certain prior deferment or forbearance periods so that they can count toward student loan forgiveness, has been a mess. But we may be about to get more insight into how bad things really are.

The buyback program, which was created in 2023 under the Biden-Harris administration, has been plagued by a large and growing backlog. Essentially, the Education Department has been processing applications at a slower rate than they have been receiving them. As a result, the backlog keeps getting larger. According to data released by the Department earlier this year, the backlog started off at around 49,000 applications in the spring, but had increased to more than 70,000 applications six months later, despite steady processing of 1,000 to 3,000 PSLF Buyback requests each month.

But data reporting stalled (as did PSLF Buyback application processing) due to the recent government shutdown. That likely did not stop borrowers from submitting PSLF Buyback requests and applying for student loan forgiveness, however. Now that the government has reopened, the Education Department should file a new PSLF Buyback processing update within the next few weeks. Borrowers will then have a much clearer picture of how bad the PSLF Buyback backlog really is.