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Federal student loan borrowers pursuing Public Service Loan Forgiveness, or PSLF, are facing new eligibility rules after key provisions of President Donald Trump‘s One Big Beautiful Bill Act took effect on July 1, changing which repayment plans qualify and limiting options for some Parent PLUS borrowers.
PSLF is a federal program created in 2007 that forgives eligible student loan balances for government and nonprofit employees after they make 120 qualifying monthly payments, or 10 years of service. While federal courts blocked the Trump administration’s separate effort to narrow eligible employers, other changes enacted under the new law remain in effect.
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New Repayment Rules Affect PSLF
Borrowers who take out federal student loans on or after July 1 must enroll in the new Repayment Assistance Plan, or RAP, if they want their payments to count toward PSLF. The default Tiered Standard Repayment Plan does not qualify for the program.
“For anyone borrowing a new loan on or after July 1, 2026, this is especially important, because the Tiered Standard Plan is the default,” Rich Williams, former deputy assistant secretary at the U.S. Department of Education, told CNBC. “New borrowers who don’t actively pick a plan get placed there automatically, quietly earning zero PSLF credit.”
Existing borrowers continue to have access to other qualifying income-driven repayment plans, including Income-Based Repayment, or IBR. Nancy Nierman, assistant director of New York’s Education Debt Consumer Assistance Program, said borrowers pursuing PSLF should focus on selecting the lowest-cost qualifying repayment option because “it’s a 10-year path to forgiveness regardless of which plan you are enrolled in.”
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Parent PLUS Borrowers Lose A Key Path
The new law also removes access to income-driven repayment plans for many Parent PLUS borrowers, effectively shutting off their path to PSLF.
Parents who borrowed after July 1 generally qualify only for the Tiered Standard Repayment Plan, while existing borrowers who did not consolidate their loans during a limited transition period may also lose access to qualifying repayment options.
The employer eligibility dispute, however, remains on hold after two federal judges last month struck down a separate Trump administration rule that would have allowed the Education Department to exclude organizations engaged in alleged unlawful activities from the program. The department has since said language requiring employers to certify they have not engaged in illegal activities will have no effect while it updates PSLF forms to comply with the court order.
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The latest PSLF changes are part of the broader student loan overhaul under the One Big Beautiful Bill Act, which took effect July 1 and introduced new repayment plans, borrowing limits and accountability measures across the federal student loan system.
The transition has also introduced new considerations for borrowers enrolling in RAP. Borrowers who miss a payment by even one day can lose benefits such as interest subsidies and principal reduction matching, while the Education Department is offering a temporary interest-rate incentive for eligible Federal Direct Loan borrowers who enroll in autopay by Sept. 30.
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