Student Loan Borrowers Pursuing PSLF Face New Setbacks

Borrowers hoping to have their student loans forgiven under the Public Service Loan Forgiveness (PSLF) program are facing a growing pile of barriers that may make it harder to get relief. And things may get worse before they get better.

PSLF allows borrowers to get student loan forgiveness after 10 years, or after making the equivalent of 120 qualifying payments. To be considered “qualifying,” the payments must be made on a Direct federal student loan under a qualifying repayment plan (for the most part, income-driven repayment plans) while the borrower is working full-time (30 hours per week or more) as a W-2 employee for an eligible nonprofit or public organization.

To be clear, PSLF is not going away. The program was created by Congress in 2007, and it is enshrined in federal statute. It would take an act of Congress to fundamentally alter or repeal the program. Republican lawmakers had the opportunity to do that in 2025 when they passed the One Big Beautiful Bill Act, and while that legislation made major changes to many federal student loan programs, it left PSLF intact. 

But the Trump administration, via the U.S. Department of Education, nevertheless appears to be trying to limit student loan forgiveness under the PSLF program. And those efforts may be accelerating. Here’s what’s happening.

Education Department rolls back PSLF credit for some student loan borrowers

In August 2026, some borrowers on track for PSLF began receiving notifications from the Education Department that their PSLF qualifying payment counts had been suddenly adjusted, and not in the direction one might hope. Certain borrowers received “qualifying payment reduction notices,” indicating that their PSLF payment counts were revised downward. Other borrowers received no official notice but saw a smaller total PSLF payment count suddenly reflected in their StudentAid.gov accounts.

The department has provided little public information about what is going on. But a department spokesperson indicated in August 2026 that the rescinded PSLF credit is related to efforts to correct data irregularities introduced into the department’s PSLF systems, which the spokesperson blamed on the Biden administration. Based on anecdotal reports, the targeted issues appear to be borrowers who were either in a nonqualifying repayment plan or a nonqualifying forbearance, mostly after May 2024, who received PSLF credit for periods that should not have counted toward student loan forgiveness.

But some other borrowers who appear to have been fully complying with PSLF eligibility rules also seem to have gotten their earned PSLF credit reversed. Student loan borrower advocacy groups have grown increasingly concerned that the department is, at a minimum, being sloppy with its data cleanup efforts, and possibly worse.

“We still don’t know much, but based on what we do know, we’re sounding the alarm,” said Protect Borrowers in a Substack post in August 2026. “The Trump Administration is altering borrowers’ loan records without any meaningful transparency. In doing so, they could be violating borrowers’ statutory rights by clawing back PSLF credits properly earned and awarded through the Higher Education Act, the federal law that governs the PSLF program.”

So far, the department has not publicly acknowledged that some student loan borrowers are wrongfully losing their PSLF credit, nor have officials indicated when (or if) the rescinded credits will be restored.

Trump administration appeals rulings that struck down PSLF regulations limiting student loan forgiveness

In another major development, the Education Department announced in August 2026 that it is appealing two court rulings that struck down proposed new rules that would have given the department sweeping authority to disqualify PSLF employers, potentially hindering borrowers’ ability to get their student loans forgiven under the program.

The new rules, which were supposed to go into effect on July 1, 2026, would have allowed the department to remove the ability of a public service employer to participate in the PSLF program if it engaged in activities that have a “substantial illegal purpose.” The department argued that the new restrictions were necessary to ensure that the PSLF program was only benefiting organizations engaged in lawful activities. 

Under the proposed rules, borrowers working for impacted organizations that are disqualified would have no recourse and no right of appeal. They would just have to find a new job with a different qualifying PSLF employer if they wanted to continue pursuing student loan forgiveness, the department had said.

A vast group of nonprofit organizations, state and local governments, and labor unions filed legal challenges, arguing that the proposed changes were clearly illegal and would simply become a vehicle for the Trump administration to coerce or punish nonprofit groups and Democratic-led state and city governments that opposed the administration’s policy goals.

On June 30, 2026 (just a day before the rules were set to take effect), two federal judges struck down the proposed PSLF regulations, handing student loan borrowers a clear victory. The courts ruled that the laws Congress passed to create the PSLF program did not authorize the sweeping powers the Education Department claimed to have to disqualify otherwise-eligible PSLF employers.

But the department had 60 days after those rulings to appeal. And just days before that deadline, the department did just that and filed notices of appeal in the two federal district courts that had issued the decisions in June. That is the first step in what could be a lengthy appeal process in two separate federal circuit courts.

Nothing has immediately changed for student loan borrowers pursuing PSLF. But the appeal process will inevitably create a new cloud of uncertainty for borrowers, and it means the legal battle may be far from over.

New regulatory hurdles for student loan borrowers pursuing PSLF

Meanwhile, on July 1, 2026, the Education Department enacted new regulations to implement the One Big Beautiful Bill Act. The new rules will affect nearly all federal student loan borrowers in some way. While the legislation preserves PSLF, the department’s regulations to implement that legislation impose some new barriers that could be a problem for borrowers, and many people may not even know about it.

In particular, the new regulations mandate that going forward, only on-time payments will count as “qualifying payments” for PSLF. Previously, borrowers effectively had a 15-day grace period during which a slightly late payment could still qualify toward loan forgiveness under the program. But not any longer.

“For borrowers with only loans disbursed before July 1, 2026, a qualifying payment is a full, on-time monthly payment you make while working full time for a qualifying employer,” says updated Education Department PSLF guidance. “The payment must be for the amount listed on your bill, made on or before the due date.”

Student loan borrowers on track for PSLF should ensure that all payments are made on or before their billing due date going forward, regardless of their specific repayment plan. And it may be a good idea to even make the payment a few days early, particularly if the billing due date falls on a weekend or holiday, as the Education Department has not articulated whether a payment would be considered “on time” if it’s not processed until the next business day.