The Public Service Loan Forgiveness program has undergone significant modifications following the implementation of the One Big Beautiful Bill Act, with changes taking effect July 1. While federal courts have blocked certain Trump administration restrictions on PSLF eligibility, other alterations to the program remain in place and could affect millions of borrowers.
One major change involves new repayment plan options established under the legislation. The Tiered Standard Plan, which features fixed payments distributed across different timelines based on total debt, does not count toward the 120 payments required for loan forgiveness. New borrowers or those taking out loans after July 1 can only use the newly created Repayment Assistance Plan to qualify for PSLF. This income-driven repayment plan typically sets monthly payments between 1% and 10% of a borrower’s earnings, with the amount increasing alongside income. Existing borrowers retain access to multiple repayment plans including Income-Based Repayment, allowing them to select the most cost-effective option.
Parent PLUS borrowers have been substantially impacted by the legislative changes. The law eliminated access to income-driven repayment for new Parent PLUS borrowers, who now qualify only for the Tiered Standard Repayment Plan, which provides no path toward PSLF benefits. Existing Parent PLUS loan holders had a limited window to consolidate their debt into Direct federal loans to maintain eligibility for income-driven repayment and PSLF benefits. Those who failed to complete this consolidation have lost access to these options.
Regarding employer qualification, federal courts in June invalidated a Trump administration rule that would have redefined qualifying employers by excluding organizations that engage in unlawful activities. Critics argued the vague language could have permitted selective exclusion of nonprofits. The Education Department stated it was updating PSLF certification forms to comply with the court order, noting that employer certifications regarding illegal activities would have no effect. Borrowers are advised to complete employer certification forms annually and maintain records of qualifying payments.
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