The Trump administration’s Public Service Loan Forgiveness program has undergone significant changes effective July 1, following the passage of the One Big Beautiful Bill Act. While federal courts have blocked certain efforts to curtail PSLF eligibility, other modifications are now affecting borrower access to the program.
One major change involves repayment plan options. New borrowers who take out loans after July 1 must enroll in the Repayment Assistance Plan, an income-driven repayment option where monthly payments typically range from 1% to 10% of earnings. However, the Tiered Standard Plan, which offers fixed payments spread over various timelines depending on debt levels, does not count toward the 120 required payments for PSLF. Experts warn that new borrowers who fail to actively select a repayment plan will be automatically enrolled in the Tiered Standard Plan, earning zero PSLF credit. Existing borrowers retain more flexibility, as they may choose from income-driven plans including Income-Based Repayment and can select whichever option produces the lowest monthly payment.
Parent PLUS borrowers have faced significant restrictions under the new legislation. Parent PLUS loans no longer provide access to income-driven repayment plans or PSLF benefits. Those who took out parent loans after July 1 can only use the Tiered Standard Repayment Plan. Earlier parent borrowers had a brief window to consolidate their debt into Direct federal loans to maintain income-driven repayment access, but those who did not complete consolidation have lost eligibility for both income-driven plans and PSLF forgiveness.
A third development involves employer eligibility. Two federal judges struck down a Trump administration rule in June that would have changed the definition of qualifying employers to exclude organizations engaging in unlawful activities. Critics argued the language was too vague and could have allowed selective exclusion of nonprofits. The Education Department has stated that employer certification language regarding illegal activities will have no effect on PSLF eligibility. Borrowers are advised to complete the employer certification form annually and maintain records of confirmed qualifying payments to ensure their jobs remain eligible for the program.
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