The PSLF Act changes student loan borrowers should be aware of

Although federal courts have blocked the Trump administration’s efforts to limit eligibility for Public Employee Loan Forgiveness, some recent changes still affect borrowers’ ability to benefit from the program.

For example, the new payment plan does not qualify for PSLF, and many parents who borrow now may be locked out of the program altogether. These changes were created by President Donald Trump’s One Big Beautiful Bill Act, which overhauled the nation’s student loan program, and went into effect on July 1.

The PSLF, which President George W. Bush signed into law in 2007, allows certain nonprofit and government employees to have their student loans canceled after 120 payments, or 10 years. More than 9 million borrowers may qualify, according to a 2022 estimate from Protect Borrowers, a nonprofit organization.

Here are three recent PSLF updates.

To qualify for PSLF, student loan borrowers are required to enroll in certain repayment plans.

Any time spent in one of the new OBBBA plans — the Tiered Standard Plan — won’t count toward your required 120 PSLF payments, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for student loan servicers. The Tiered Standard Plan comes with fixed payments, spread over different periods based on the total amount of your loan.

For new borrowers, or those who took out a loan after 1 July, the only repayment option to qualify for PSLF is the New Payment Assistance Scheme. RAP is the US Department of Education’s latest income-driven repayment program, or IDR, which means it puts borrowers’ monthly debt as a percentage of their income. Under RAP, monthly payments typically range from 1% to 10% of your earnings; the more you make, the bigger your required payment.

“For anyone taking out a new loan on or after July 1, 2026, this is very important, because the Tiered Standard Plan is a default,” said Rich Williams, former deputy assistant secretary at the Department of Education. “New borrowers who don’t take the scheme well are put there automatically, quietly getting PSLF loans.”

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

If you’re hoping to have your debt cleared from the PSLF, you should ignore the forgiveness period in the IDR program, Nierman added. For example, RAP ends by canceling the loan only after 30 years.

But for PSLF borrowers, he said, “it’s a 10-year path to forgiveness no matter what plan you’re signed up for.”

Many parents who took out student loans for their children’s higher education are no longer eligible for PSLF, thanks to the OBBBA changes. That’s because the law excludes Parent PLUS borrowers from accessing the IDR.

“The parents’ PLUS loan no longer has an income or PSLF repayment option,” said Williams.

Parent borrowers who take out a loan after 1 July are now only eligible for the Standard Tiered Repayment Plan, which can count towards the PSLF.

During that time, existing Parent PLUS loan holders had a short window to consolidate their debts and be able to keep track of enrollment in the IDR program. Consolidating Parent PLUS loans leaves borrowers with a Direct federal loan — the type that most students carry.

But if you have not done so, you have lost access to IDR schemes and hence PSLF benefits, say experts.

Student borrowers may no longer have to worry about whether their employer will remain eligible for PSLF. That’s because two federal judges in June struck down a Trump administration rule that would have changed the definition of “eligible employer” under the PSLF to exclude organizations that “engage in illegal activities.”

Opponents of the policy say the vague language would have allowed the Trump administration to shut down nonprofits it doesn’t like.

“The management can oppose the decision, but they have not said anything since the law was repealed,” said Nierman. “And if they appeal, there is no guarantee that they will win.”

The Ministry of Education recently wrote on its website that it is trying to revise the PSLF form to comply with the court order, but “the language about the employer’s certificate that he has not committed illegal activities will have no effect.”

The best way to find out if your employer qualifies for PSLF is to complete what is called an employer certification form. It’s best to fill out this form at least once a year and keep records of your eligible guaranteed payments, experts say.