Education Dept Proposes PSLF Rule With 10-Year Employer Ban

The Education Department on Friday unveiled a proposed overhaul of the Public Service Loan Forgiveness program, aiming to disqualify employees of organizations that are deemed to engage in activities with a “substantial illegal purpose.” The plan would give the education secretary final authority to determine which employers qualify, implement a 10-year ban on loan forgiveness for workers at those organizations, and require a corrective action plan before eligibility could be restored. Public comments will be accepted for 30 days, with the rule slated to take effect in July 2026. Department officials said the changes would affect a relatively small number of employers each year, but critics warned the move could politicize a program meant to support public service.

Under the proposed rule, the definition of an ineligible employer would hinge on participation in activities considered illegal, including human trafficking, gender-affirming medical care for minors in states that bar it, illegal immigration activities, and support for foreign terrorist organizations. The department would also consider actions such as violations of federal discrimination laws and activities intended...