Student-loan borrowers could lose access to public service debt relief under a new Trump rule. Here’s what’s changing.

• Trump’s administration finalized its rule to limit the Public Service Loan Forgiveness program.
• The rule will prohibit PSLF for employers that the administration determines are engaging in illegal activity.
• The rule is set to go into effect in July 2026, and borrower advocates said they are planning legal action.

Eligibility for a major student-loan forgiveness program for public servants is officially narrowing.

On October 30, President Donald Trump’s Department of Education announced the final rule to limit the Public Service Loan Forgiveness program, which forgives student debt for government and nonprofit workers after 10 years of qualifying payments.

The rule delivers on an executive order Trump signed in March to redefine what “public service” means, including ensuring that employers who participate in activities that do not align with the administration’s political views will be barred from qualifying for PSLF.

“The Public Service Loan Forgiveness program was meant to support Americans who dedicate their careers to public service — not to subsidize organizations that violate the law, whether by harboring illegal immigrants or performing prohibited medical procedures that attempt to transition children away from their biological sex,” Undersecretary of Education Nicholas Kent said in a statement.

Advocacy groups said they plan to sue the administration over the changes to PSLF.

“This is a direct and unlawful attack on nurses, teachers, first responders, and public service workers across the country,” advocacy groups Democracy Forward and Protect Borrowers said in a statement, adding: “That’s why we will soon see the Trump-Vance administration in court.”

The Department of Education said the changes will go into effect on July 1, 2026. Here’s what you need to know.

What’s changing for PSLF

Narrowing eligibility

The department’s final rule changes the definition of a “qualifying employer,” which previously used to be any government or nonprofit entity. The department said it will now exclude employers that have “substantial illegal purpose,” including: supporting terrorism; helping transgender people transition; working with undocumented immigrants; and engaging in a “pattern” of violating state laws.

“When an organization has a pattern or practice of engaging in certain illegal conduct, they have a substantial illegal purpose because a significant amount of their activities are supporting illegal activity,” the department’s fact sheet said. “Illegal activity by its very nature runs contrary to the public good.”

The fact sheet said that employers following the law will not be impacted, along with those found to have “minor compliance issues.”

How ‘illegal activity’ will be determined

The fact sheet said that the education secretary will weigh evidence of illegal activity to determine whether it is substantial enough to disqualify the employer from PSLF. Employers will receive notice and an opportunity to review the allegations of illegal activity, and they’ll also be able to rebut the department’s findings.

Borrowers will also receive a notice that their employer has been notified that they might no longer be eligible for PSLF. The department said the PSLF Help Tool, which helps borrowers find qualifying employers, will be updated to reflect any pending eligibility determinations.

What happens if an employer is deemed ineligible

If an employer is disqualified from PSLF, the fact sheet said they can reapply to be a qualifying employer after 10 years, or they can enter a “corrective action plan” before being disqualified to maintain PSLF eligibility. Borrowers are not able to appeal their employer’s qualifying status themselves.

Once an employer no longer qualifies for PSLF, any payment borrowers make to that employer after July 1, 2026 will not count toward PSLF progress. However, any retroactive payments will not be disqualified.