Department Changes Public Service Loan Forgiveness Program to Exclude Employers with a “Substantial Illegal Purpose”

On October 31, 2025, the U.S. Department of Education issued a final rule amending its Public Service Loan Forgiveness (also known as the “PSLF”) program regulations. The PSLF program provides loan forgiveness to borrowers employed at qualifying, public service employers, such as government and non-profit entities. Under the revised rule, starting on July 1, 2026, the Department of Education will have the authority to remove PSLF loan forgiveness eligibility from borrowers at an otherwise qualifying employer if ED determines the employer has a “substantial illegal purpose.” Powers has released an article summarizing the amended rule, and its implications for qualifying employers.