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Huge Changes Proposed For Student Loan Forgiveness and Repayment Plans: What Borrowers Need to Know
There’s been no shortage of recent developments across student loans, but this is something you might have missed. A discrete stipulation in the GOP’s 2025 tax legislation proposal could mean a massive rollback in student loan forgiveness and repayment eligibility, particularly for the Public Service Loan Forgiveness (PSLF) program. Keep reading for everything to know.
What is the Public Service Loan Forgiveness (PSLF) program?
The PSLF program—created in 2007—is designed to forgive federal student loans for those working in public service positions as well as for nonprofit organizations. After qualifying workers satisfy 120 monthly payments, their remaining balance is forgiven.
Why is the PSLF in jeopardy?
President Donald Trump issued an executive order in March 2025, redefining PSLF eligibility. Namely, the order targeted employees of organizations suspected of having a “substantial illegal purpose.” These purposes include:
- Federal immigration law violations
- Terrorism support
- Child abuse, including but not limited to certain medical procedures on children
- Illegal discrimination behaviors
- State laws violations
The GOP tax legislation—introduced by Republican lawmakers on May 12—overlaps with the rollback of PSFL qualifications, specifically as they relate to nonprofit organizations. The proposed tax bill would grant the Treasury Department unilateral ability to revoke the nonprofit status of select organizations—given that employment type is crucial for PSLF eligibility, many employees could be impacted by the new, nondescript standards set forth by the GOP.
Income-Driven Repayment plans could also be impacted by the GOP tax plan
In addition to the redefining PSLF qualifications and the ways in which the GOP tax plan could recategorize select organizations, the budgetary legislation—if passed—could also get rid of income-driven repayment plans (IDR) including ICR, SAVE and PAYE.
Republican lawmakers, instead, have proposed something called the Repayment Assistance Plan (RAP), which would force borrowers to surrender 30 years’ worth of payments as opposed to the IDR’s 20-25 years.
Borrowers enrolled in the PSLF could potentially find a repayment plan as part of the PSLF. However, the changes made to those who qualify—as well as the 30-year payment expansion—could make it hard for many to finally achieve full loan forgiveness.
What should PSLF borrowers do?
The changes to PSLF stemming from Trump’s March executive order have yet to be implemented as of publication, and the GOP tax bill has also not been passed. The Department of Education is in the process of reviewing the executive order, and the tax bill is still in the early stages of legislative debate. As such, borrowers do not need to add any actionable items to their agendas, but rather stay alert to any legal changes made to their company’s status.
There are some smart moves, however, that borrowers can put on their radars as legislation continues to evolve.
- Certify your employment every year: If you benefit from the PSLF, go ahead and submit a PSLF Employment Certification Form at studentaid.gov, even if your current company is qualified. This will create a reputable paper trail in the event of legal changes. You should also download and save all records of your employer’s certification approval history, as well as history of your payments.
- Keep track of legislative updates at congress.gov as well as studentaid.gov/announcements-events.
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