The Public Service Loan Forgiveness program has undergone significant modifications following the implementation of the One Big Beautiful Bill Act, which reformed the federal student loan system. The changes, which took effect on July 1, create new constraints and opportunities for borrowers seeking loan cancellation after 120 qualifying payments over 10 years.
One major shift involves the introduction of the Tiered Standard Plan, a fixed-payment repayment option that does not count toward PSLF eligibility. New borrowers who obtain loans on or after July 1 are automatically enrolled in this plan by default unless they actively select an alternative. These borrowers can only qualify for PSLF through the Repayment Assistance Plan, an income-driven option that typically requires payments between 1% and 10% of annual earnings. Existing borrowers retain access to multiple income-driven repayment plans, including Income-Based Repayment, and should evaluate which option produces the lowest monthly payment while maintaining PSLF qualification.
Parent PLUS loan borrowers face more restrictive circumstances under the new rules. Parents who took out loans after July 1 can only access the Tiered Standard Plan and have been blocked from income-driven repayment options and PSLF benefits. Existing Parent PLUS holders were given a limited opportunity to consolidate their loans into Direct federal loans to potentially preserve income-driven repayment access, but those who did not complete consolidation have lost these pathways.
A federal court development provides relief in one area of PSLF administration. Two judges struck down a Trump administration rule in June that would have redefined qualifying employers to exclude organizations engaging in unlawful activities. Critics contended the vague language could permit selective exclusion of nonprofits. The Education Department has indicated it is updating PSLF forms to comply with the court order while noting that employer certifications regarding illegal activities will carry no weight in eligibility determinations.
Borrowers can verify employer qualification for PSLF by completing the employer certification form, which experts recommend filing annually while maintaining records of confirmed qualifying payments.
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