The U.S. Department of Education published a notice of proposed rulemaking on Monday in the Federal Register to amend regulations governing the Public Service Loan Forgiveness (PSLF) program, effective July 1, 2026. The proposal follows a March executive order, Restoring Public Service Loan Forgiveness, which directs the secretary of Education to exclude employers engaged in activities deemed to have a substantial illegal purpose. Comments are due by Sept. 17.
The proposed rule would revise the definition of a qualifying employer to exclude organizations engaged in activities that violate state or federal law or conflict with established public policy. The department would establish a process to monitor and evaluate employer eligibility under this new standard.
The rule introduces a definition of “substantial illegal purpose” that includes activities such as “aiding or abetting,” “trafficking,” “terrorism,” “illegal discrimination,” “violations of state law,” and “violence intended to obstruct or influence federal policy.” It also includes a definition of “chemical and surgical castration or mutilation,” which encompasses certain gender-affirming medical interventions. Specifically, it would apply to the use of puberty blockers, such as GnRH agonists, and sex hormones including androgen blockers, estrogen, progesterone, or testosterone when used for gender-affirming care.
Under the proposal, any payments made toward PSLF after an employer is determined to be engaged in a substantial illegal purpose would no longer count toward forgiveness. Borrowers would not be able to appeal a loss of qualifying payment credit, but employers could regain eligibility 1 to 10 years after the determination or upon implementation of an approved corrective action plan issued by the secretary. The department would notify borrowers and update the qualifying employer list within 30 days if an employer regains status.
The AAMC submitted a May letter to the secretary of Education urging the department to maintain existing employer eligibility for PSLF (PDF), among other issues.
- Washington Highlights