WASHINGTON, D.C. — The U.S. Department of Education has issued a Notice of Proposed Rulemaking (NPRM) aimed at tightening eligibility requirements for the Public Service Loan Forgiveness (PSLF) program. The proposal seeks to ensure that taxpayer-funded benefits are not granted to borrowers employed by organizations engaged in activities with a “substantial illegal purpose.”
Under the proposed rule, entities found to be involved in unlawful conduct—including supporting terrorism, aiding or abetting discrimination or immigration law violations, or child abuse—would no longer qualify as eligible employers under the PSLF program. The move reflects the Department’s ongoing effort to restore PSLF’s focus on supporting borrowers who work for organizations providing genuine public services.
“President Trump has given the Department a historic mandate to restore the Public Service Loan Forgiveness program to its original purpose — supporting public servants who strengthen their communities and serve the public good, not benefiting businesses engaged in illegal activity that harm Americans,” said Under Secretary of Education Nicholas Kent. “The federal government has a vital interest in deterring unlawful conduct, and we’re moving quickly to ensure employers don’t benefit while breaking the law.”
Background on the Proposed Changes
The proposed rule follows President Trump’s Restoring Public Service Loan Forgiveness Executive Order, signed on March 7, 2025, which directed the Department to revise PSLF regulations and ensure the definition of “public service” excludes organizations engaged in substantial illegal activity.
Following the executive order, the Department held two public hearings in May to gather feedback from borrowers and higher education stakeholders. A negotiated rulemaking committee was then convened in July to review and refine draft regulations. While the majority of committee members supported redefining the criteria for qualifying PSLF employers, the group fell short of reaching full consensus, with one member objecting to the proposed changes.
Comment Period and Next Steps
The Department is inviting public feedback on the NPRM through the Federal eRulemaking Portal. Comments must be submitted by September 17, 2025, and late submissions or those sent by email or fax will not be considered.
Once the public comment period closes, the Department will review input before finalizing the regulations. If adopted, the rule would significantly narrow the scope of qualifying employers, aligning PSLF eligibility more closely with organizations that demonstrably serve the public interest.
Strengthening Oversight of Public Service Loan Forgiveness
Established under Title IV of the Higher Education Act, the PSLF program forgives the remaining balance on federal student loans for borrowers who work in qualifying public service jobs and make 120 monthly payments under eligible repayment plans. The proposed changes mark a shift toward stricter oversight, aiming to prevent organizations involved in illegal activities from benefiting from federal programs designed to serve the public good.
The Department framed the initiative as part of a broader effort to preserve the integrity of PSLF, ensuring the program continues to prioritize borrowers working in roles that uphold American values and contribute meaningfully to their communities.
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