PSLF update: Trump administration drops two appeals over rule to cut off some employers

The Trump administration has backed off two of its three court fights over a rule that would have let the Education Department cut off Public Service Loan Forgiveness (PSLF) for workers at employers it accused of illegal activity. On Wednesday, Oct. 21, Justice Department lawyers filed joint stipulations to dismiss two appeals, The College Investor reported. “Public service loan forgiveness” topped 50,000 US searches on Google Trends overnight, alongside “student loan” and “trump student loan forgiveness.”

This article is general information, not financial or legal advice. Check your own situation with your loan servicer or StudentAid.gov.

What was the PSLF employer rule?

PSLF forgives the remaining federal student loan balance for people who work for qualifying public service employers, such as government agencies and 501(c)(3) nonprofits, after they make qualifying payments.

The rule at the center of the fight would have let the Education Department disqualify employers it found had a “substantial illegal purpose.” The department listed activities such as aiding violations of federal immigration law and illegal discrimination, according to The College Investor. Borrowers working for a disqualified employer would have stopped earning qualifying payments after the determination date.

Public Citizen, which represented plaintiffs in one case, said the rule targeted organizations engaged in activities the administration opposes, including supporting immigrants and providing gender-affirming care, and that it threatened as many as 2.5 million borrowers. That figure is Public Citizen’s estimate.

How it got here

According to The College Investor:

Date	What happened
Oct. 31, 2025	Final PSLF employer rule published
Nov. 3-4, 2025	Nonprofits, unions, cities, and 22 states plus D.C. sue
June 30, 2026	Courts in Massachusetts and D.C. vacate the rule, a day before it was to take effect
Aug. 27, 2026	Government appeals all three rulings
Oct. 21, 2026	Government drops two of the three appeals
Nov. 4, 2026	Government’s brief due in the remaining appeal

Which appeals were dropped

• RFK Center for Justice and Human Rights v. McMahon (D.C. Circuit): dropped.
• National Council of Nonprofits v. McMahon (First Circuit), brought by nonprofits, unions and cities: dropped.
• Commonwealth of Massachusetts v. U.S. Department of Education (First Circuit), brought by 22 states and D.C.: still pending. The government’s opening brief is due Nov. 4.

The filings gave no reason for the reversal, and each side agreed to pay its own fees and costs, The College Investor reported. The outlet said it “appears likely” the states’ appeal will also be dropped, but that has not happened yet.

What advocates said

“The Trump administration never had a legal basis for politicizing the public service loan forgiveness program,” said Cormac Early, lead attorney for the plaintiffs in the D.C. case and an attorney with Public Citizen Litigation Group. “Now, nonprofit and public service workers who support immigrant and other vulnerable communities can continue their work without the threat of retribution.”

Dan Zibel, chief counsel at Student Defense, which also represented the D.C. plaintiffs, called the administration’s attempt “anti-democratic and unlawful from the start” and said the outcome is “a significant victory for millions of Americans who have dedicated their careers to public service,” according to The College Investor.

We did not find a public explanation from the Education Department or the Justice Department for dropping the appeals.

What it means for PSLF borrowers

For now, nothing changes in how PSLF works day to day. The employer rule remains vacated under the June 30 rulings, so it cannot be enforced, and the existing rules for qualifying employers stay in place. The Massachusetts ruling still vacates the rule nationwide, and the states’ appeal is now the government’s only remaining path to reviving it, The College Investor reported.

The College Investor’s suggestions for borrowers:

1. Keep certifying employment. Submit the PSLF form at least once a year and after any job change.
2. Don’t rush a job change because of this rule. Your employer can’t be disqualified under a vacated rule.
3. Stay on a qualifying repayment plan. The outlet lists the Repayment Assistance Plan, IBR, PAYE and ICR as counting toward PSLF.

FAQ

Is the PSLF employer rule in effect? No. Courts vacated it on June 30, 2026.

Is PSLF ending? No. This fight was over which employers qualify, not over the program itself.

What’s the next date to watch? Nov. 4, when the government’s brief is due in the states’ appeal, unless it drops that case first.