The Public Service Loan Forgiveness program has undergone significant changes following the enactment of the One Big Beautiful Bill Act, effective as of July 1. While federal courts have blocked certain Trump administration efforts to restrict PSLF eligibility, other modifications continue to affect borrower participation in the program.
One major change involves new repayment plan options established under the legislation. The Tiered Standard Plan, which features fixed payments distributed across varying timelines based on total debt, does not qualify for PSLF credit. New borrowers taking out loans after July 1 can only enroll in the Repayment Assistance Plan to receive PSLF benefits. This income-driven plan typically requires monthly payments ranging from 1% to 10% of earnings. Existing borrowers retain access to multiple income-driven repayment options, including Income-Based Repayment, and should evaluate which plan offers the lowest monthly payment while maintaining their path to the 10-year PSLF forgiveness timeline.
Parent PLUS borrowers have experienced a significant restriction under the new law. Parents who borrowed loans after July 1 now have access only to the Tiered Standard Repayment Plan, which does not count toward PSLF. Existing Parent PLUS borrowers had a limited window to consolidate their loans into Direct federal loans to maintain access to income-driven repayment options and PSLF eligibility. Those who failed to consolidate during that period have lost access to these benefits entirely.
Regarding employer eligibility, federal courts in June blocked a Trump administration rule that would have altered the definition of qualifying employers under PSLF. The contested rule would have excluded organizations engaging in unlawful activities, language critics said was vague enough to enable selective exclusion of nonprofits. The Education Department stated that employer certification regarding legal compliance would have no effect on PSLF qualification. Borrowers are advised to submit employer certification forms annually and maintain records of qualifying payments to verify PSLF eligibility.
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