PSLF Employer Eligibility Restrictions
Key Questions
What is the new PSLF rule effective July 1?
The rule gives the Education Secretary authority to disqualify employers from Public Service Loan Forgiveness if they engage in activities with a 'substantial illegal purpose.' This vague standard applies to public-sector employers and may have retroactive effects on borrowers' progress.
What legal challenges are underway regarding the PSLF employer rule?
States have filed lawsuits against the rule, and a court hearing has already been held. Legal challenges are ongoing due to concerns over the broad and undefined powers granted to the Education Secretary.
How might the new rule impact PSLF borrowers or public-sector employers?
The vague threshold could discourage public-sector hiring and potentially disrupt borrowers' eligibility for forgiveness. It raises risks of retroactive disqualification for past qualifying employment.
New rule effective July 1 gives Education Secretary power to disqualify employers with 'substantial illegal purpose'—a vague threshold that could chill public-sector hiring and potentially retroactively affect borrowers' PSLF progress. Court hearing held; states are suing. Legal challenge underway.