On June 30, 2026, two federal district courts issued orders vacating the Department of Education’s (ED) Public Service Loan Forgiveness (PSLF) final rule. Under the PSLF program, the Secretary of Education is required to forgive the remaining balance of federal student loans for borrowers who have made ten years of payments on their loans while working for a qualifying public service employer.

On October 31, 2025, ED issued a final rule revising the PSLF regulations to “ensure [that] the definition of ‘public service’ excludes organizations that engage in activities that have a substantial illegal purpose,” in accordance with Executive Order 14235, Restoring Public Service Loan Forgiveness. The final rule revises what organizations qualify as public service employers by excluding certain nonprofits from PSLF eligibility for engaging in what the Department defines to be “substantial illegal activity”—which it defines, for example, as aiding or abetting violations of federal immigration law, engaging in gender-affirming care, supporting terrorism, or engaging in a pattern of illegal discrimination.

LeadingAge submitted a comment letter in September expressing concern that the statute that created the program defines “public service employer” in a way that includes all 501(c)(3) tax-exempt organizations and questioning whether ED has the authority to restrict the definition of qualifying employer as it had proposed (and ultimately adopted). We stated that adding new and potentially subjective restrictions may undermine the goals the program is meant to support, to the detriment of participating borrowers, employers, and the individuals and communities they serve.

Following its issuance, the PSLF rule was subject to legal challenges in several federal district courts. The U.S. District Court for the District of Columbia and the U.S. District Court for the District of Massachusetts issued orders on June 30, 2026, vacating the PSLF final rule. Both opinions cited the rule as being contrary to law and exceeding the Secretary’s statutory authority under the Higher Education Act. The U.S. District Court for the District of Massachusetts also found that the PSLF final rule was arbitrary and capricious and violated the First Amendment. The rule was originally set to take effect on July 1, 2026.