PSLF Changes in 2026: What's Changing, What Isn't, and What to Do Before July 1

Public Service Loan ForgivenessPublic Service Loan Forgiveness (PSLF)A federal program that forgives the remaining balance on Direct Loans after 120 qualifying monthly payments made while working full-time for a government or qualifying nonprofit employer. is not going away in 2026. The 120-payment, 10-year structure is intact, and Congress did not repeal PSLF.

But three things are changing: a Department of Education final rule on which employers qualify (effective July 1, 2026), the Repayment Assistance Plan (RAP) launching under the One Big Beautiful Bill Act, and a March 2026 revision to the PSLF buyback formula. Each affects a different group of borrowers, and what you should do depends on which applies to you.

Is PSLF Going Away in 2026?

No. PSLF is a statutory program — Section 455(m) of the Higher Education Act — and only Congress can eliminate it. No executive order, no rulemaking, and no agency reorganization can end the program on its own. Existing payment counts and completed forgiveness discharges are protected.

Three news events drive the “is PSLF going away” question:

• March 7, 2025: President Trump signed Executive Order 14235, “Restoring Public Service Loan Forgiveness,” directing the Department of Education to revise which employers qualify.
• July 4, 2025: Trump signed the One Big Beautiful Bill Act (OBBBA), creating RAP and phasing out most existing income-driven repaymentIncome-Driven Repayment (IDR)A category of federal student loan repayment plans that calculate monthly payments based on income and family size rather than loan balance. Any remaining balance can be forgiven after 20–25 years of qualifying payments. plans.
• October 31, 2025: The Department of Education published its final rule on employer eligibility in the Federal Register, effective July 1, 2026.

Related: Can PSLF Be Reversed? · What Happens to Student Loans If the Department of Education Is Abolished

What did change is who counts as a qualifying employer, what repayment plans are available, and how the buyback formula works.

Change #1 — The October 2025 Final Rule on Employer Eligibility

The rule defines “substantial illegal purpose” to include activities that breach federal or state law to the extent that the employer’s purpose is substantially illegal. Examples include aiding illegal immigration and supporting terrorism. The Department retained broad discretion in making these determinations.

Three points matter for a borrower evaluating risk:

• Your past PSLF credit is protected. If the Secretary later disqualifies an employer, borrowers still get full credit for months worked before the determination. Months worked after it do not count.
• Most nonprofits and government employers are not targets. Public schools, government agencies, 501(c)(3) hospitals, libraries, and traditional public service employers are not the focus of the rule.
• The rule is being challenged in court. Three lawsuits are pending: one brought by 21 states and the District of Columbia, one by a coalition of nonprofit organizations, and one by a coalition of cities, unions, and advocacy groups. Summary judgment motions were filed the week of February 9, 2026. No court has blocked the rule; unless one does before July 1, 2026, it takes effect on that date.

Related: Can Your Nonprofit Employer Lose PSLF Eligibility Under Trump’s Executive Order?

What this means if you work for a 501(c)(3) nonprofit

Most 501(c)(3) nonprofits remain eligible. The rule targets narrower categories the administration deems unlawful. If you work at a standard service-providing nonprofit — a hospital, legal aid clinic, community health center, food bank, shelter, or advocacy organization with no legal exposure — your employer is almost certainly still eligible. If your nonprofit’s mission touches immigration services, reproductive health, or politically contested advocacy, submit an employment certification now to lock in credit through the effective date.

What this means if you work for a government employer

Government employers — federal, state, local, and tribal — are largely unaffected. The rule targets employers allegedly engaged in illegal activity; government agencies operating under legal authority are not in scope.

Related: Does My Employer Qualify for PSLF?

What this means for healthcare workers

Hospitals and clinics that are 501(c)(3) nonprofits or government-run remain eligible. The rule did not change the underlying test for healthcare employers.

Related: Public Service Loan Forgiveness Hospitals: How to Verify Eligibility

What this means for teachers

Public school districts, state and public universities, and 501(c)(3) private schools remain qualifying employers.

Related: Are Teachers Public Service Workers?

Change #2 — RAP, the End of SAVESAVE Plan (SAVE)The Saving on a Valuable Education Plan, a federal income-driven repayment plan introduced in 2023 to replace REPAYE. Its implementation has been subject to ongoing litigation, and enrolled borrowers have faced court-ordered forbearance periods., and What It Means for PSLF

The One Big Beautiful Bill Act, signed July 4, 2025, created the Repayment Assistance Plan (RAP) — a new income-driven repayment plan available July 1, 2026. RAP counts as a qualifying repayment plan for PSLF. The 120-payment, 10-year structure is unchanged; what changes is which IDR plans you can use.

SAVE is gone. The SAVE Final Rule was vacated on March 10, 2026, after the Eighth Circuit reversed a February dismissal and directed the district court to enter final judgment vacating the rule. The Department announced a transition window for the roughly seven million borrowers enrolled in SAVE or its predecessor. OBBBA also phases out PAYEPay As You Earn (PAYE)A federal income-driven repayment plan that caps monthly payments at 10% of discretionary income and forgives remaining debt after 20 years. It is only available to borrowers who took out their first federal loans on or after October 1, 2007. and ICRIncome-Contingent Repayment (ICR)The oldest federal income-driven repayment plan, with payments generally set at 20% of discretionary income or a fixed 12-year amount, whichever is lower. It is the only IDR plan available to Parent PLUS borrowers after consolidation. by July 1, 2028.

Related: What Is the Repayment Assistance Plan (RAP)? — payment calculation, forgiveness timeline, trade-offs versus IBRIncome-Based Repayment (IBR)A federal income-driven repayment plan that caps monthly payments at 10% or 15% of discretionary income, depending on when the loans were taken out. Remaining debt is forgiven after 20 or 25 years of qualifying payments..

This section focuses on what RAP means for PSLF borrowers.

Your IDR options depend on when your loans were first disbursed:

• Before July 1, 2026: You keep IBR. You can opt into RAP. PAYE and ICR remain available until their July 2028 sunset, but stop accepting new enrollees after July 1, 2026.
• On or after July 1, 2026: RAP is your only income-driven option. PSLF still applies under the 120-payment rule; the math is RAP’s.

For most borrowers, RAP produces higher monthly payments than SAVE did.

Related: Why Did My Federal Student Loan Payment Increase?

What this means if you’re already on IBR

Your PSLF payment count continues uninterrupted. You can opt into RAP when it launches — but that decision has real stakes: under OBBBA, borrowers who leave IBR can’t re-enroll after July 1, 2028. Run the math before switching.

Related: Is RAP or IBR Better for PSLF?

What this means if you were on SAVE

Starting July 1, 2026, your servicer will send a 90-day notice to pick a new plan. Miss the window and you’ll be auto-enrolled in Standard Repayment or the new Tiered Standard Plan — and Standard Repayment payments do not count toward PSLF unless your loan would pay off in 10 years. Switch to IBR now, or wait until July 1 to evaluate RAP.

Related: Should You Switch IDR Plans in 2026? · What Happens to IBR and SAVE Borrowers When RAP Starts

What this means if you’re on PAYE or ICR

PAYE and ICR sunset by July 1, 2028. Switch to IBR or RAP before then to keep earning PSLF credit.

Related: Income-Driven Repayment Plans in 2026

What this means if you’ll borrow new federal loans after July 1, 2026

RAP is your only IDR option. PSLF still applies to those loans under the same 120-payment rule.

Parent PLUS and PSLF — the June 30, 2026, deadline

Parent PLUS borrowers who don’t consolidate into a Direct Consolidation Loan by June 30, 2026, permanently lose access to every income-driven repayment plan — including the double-consolidation path to IBR and the single-consolidation path to ICR. No IDR means no PSLF.

This is a disbursement deadline, not an application deadline. Your consolidation must be fully processed by June 30. The Department recommends applying by April 1, 2026, because processing takes 30 to 90 days.

Related:

• Parent PLUS Loan Consolidation
• Student Loan Changes on July 1, 2026 · Big Beautiful Bill Student Loan Changes

Change #3 — The March 2026 PSLF Buyback Formula Revision

On March 31, 2026, the Department of Education revised how it calculates PSLF buyback payments for non-qualifying months on or after July 1, 2024. Earlier periods still use the rules that applied when those months occurred.

The practical effect: borrowers buying back months spent in SAVE administrative forbearance will now pay more — often substantially more. Under the old approach, buyback for those months was calculated using the SAVE formula, which produced the lowest IDR payments available. Under the revised approach, the Department computes the buyback amount using an alternative IDR plan (typically IBR, PAYE, or ICR) based on your income and family size for the relevant period.

Roughly 88,000 buyback applications were pending as of late February 2026; many are now being recalculated.

Three things to know:

• Buyback itself still exists. The change affects the formula, not the program.
• Processing is still slow. Most applications take 6 to 12 months despite a 45-business-day target.
• You may still owe a refund if a buyback pushed you past 120 payments.

Related:

• PSLF Buyback Program: How It Works — eligibility, application steps, and the full calculation methodology
• PSLF Buyback Timeline
• How PSLF Overpayment Refund Works

What You Should Do — By Borrower Type

If you have existing PSLF credits and an eligible employer

Submit an employment certification now, even if you certified within the last year. This locks in credit for every month worked through the filing date. Stay on a qualifying plan — IBR if your loans predate July 1, 2026, or RAP once it opens. Keep your own records: pay stubs, payment receipts, and copies of every PSLF form.

If you were enrolled in SAVE

Switch to IBR now or wait for RAP on July 1, 2026 — but don’t let auto-enrollment park you in Standard Repayment when the 90-day notice runs out. Your SAVE qualifying months transfer to any other IDR plan.

Related: Should You Switch IDR Plans in 2026?

If you have Parent PLUS loans and want PSLF

Consolidate before June 30, 2026. The Department recommends applying by April 1, 2026 because processing takes 30 to 90 days. Miss the disbursement deadline and you permanently lose IDR access for those loans — which closes the PSLF door.

Related: Parent PLUS Loan Consolidation

If you have FFEL or Perkins loans and want PSLF

Consolidate to a Direct LoanDirect LoanA federal student loan made directly by the U.S. Department of Education under the William D. Ford Federal Direct Loan Program. Most federal student loans issued since 2010 are Direct Loans.. FFEL and Perkins loans don’t qualify for PSLF on their own; only Direct Loans do. This rule hasn’t changed — the July 2026 changes don’t alter it.

If your employer might be affected by the new disqualification rule

Document current employment thoroughly — pay stubs, W-2s, dated offer letters, and every employment certification you can pull. Submit a PSLF Form now to lock in credit for months worked before July 1, 2026. If the Secretary later disqualifies your employer, months worked before the determination are still protected.

Related: Can Your Nonprofit Employer Lose PSLF Eligibility?

If you’ve already made 120 qualifying payments

File for forgiveness. Don’t wait for an annual certification cycle, a servicer prompt, or any other signal. If you’ve made more than 120 qualifying payments — for example, because past months were credited through the IDR Account Adjustment — you may also be owed a refund.

Related: How PSLF Overpayment Refund Works

If you were denied PSLF

File a reconsideration request. PSLF Reconsideration lets you correct eligibility errors — most commonly an employer wrongly marked ineligible or a miscounted payment history — without starting over.

Related: PSLF Reconsideration: How to Fix a Denied PSLF Application

Timeline of PSLF Changes at a Glance

• October 1, 2007 — PSLF enacted. When Did PSLF Start?
• March 7, 2025 — Executive Order 14235, “Restoring Public Service Loan Forgiveness,” signed.
• July 4, 2025 — One Big Beautiful Bill Act signed; creates RAP, phases out SAVE/PAYE/ICR, sets Parent PLUS consolidation deadline.
• October 30, 2025 — Department of Education announces final rule on employer eligibility.
• October 31, 2025 — Final rule published in the Federal Register.
• February 9, 2026 — Summary judgment motions filed in three lawsuits challenging the rule.
• March 9, 2026 — Eighth Circuit reverses SAVE dismissal in Missouri v. Trump.
• March 10, 2026 — District court enters final judgment vacating the SAVE Final Rule.
• March 31, 2026 — Buyback formula revised for periods on or after July 1, 2024.
• April 1, 2026 — Recommended deadline for Parent PLUS consolidation applications.
• June 30, 2026 — Last day for Parent PLUS consolidation to be disbursed and preserve IDR/PSLF access.
• July 1, 2026 — Employer eligibility rule takes effect; RAP launches; new loans defaultDefaultThe status of a federal student loan after the borrower has failed to make required payments for 270 days. Default can trigger collection actions such as wage garnishment, tax refund offset, and damage to credit reports. to RAP; SAVE borrowers get 90-day notices.
• July 1, 2028 — PAYE, ICR, and SAVE eliminated; only IBR and RAP remain.