Loan Forgiveness Denied for Shady Bosses: Education's Tough Love
Published Date: 10/31/2025
Rule
Summary
Starting July 1, 2026, the government will stop loan forgiveness for people working at employers involved in serious illegal activities. If an employer is flagged, workers keep their credit until the decision date, and employers can fix issues to get back in the program. This change protects taxpayers and makes sure loan forgiveness only helps those working for honest organizations.
Analyzed Economic Effects
6 provisions identified: 3 benefits, 3 costs, 0 mixed.
Employers Doing Illegal Acts Lose PSLF
Starting July 1, 2026, employers that the Secretary determines engage in certain enumerated illegal activities such that they have a “substantial illegal purpose” will no longer count as qualifying employers for Public Service Loan Forgiveness (PSLF). If your employer is so determined, payments you make after the Secretary's determination date will not count toward the 120 qualifying payments needed for forgiveness.
You Keep Credit Until Determination Date
If your employer is later found to have a substantial illegal purpose, you will keep full PSLF credit for work you did up through the effective date of the Secretary's determination. Only months worked after the Secretary's determination date will not count for PSLF.
Employers Can Regain PSLF Eligibility
An employer that loses PSLF eligibility may regain qualifying-employer status either 10 years after the Secretary’s determination or sooner if the Secretary approves a corrective action plan. If an employer regains eligibility, the Department must update the qualifying-employer list within 30 days.
Borrowers Cannot Reconsider Employer Determinations
Under the final rule, a borrower may not request reconsideration of the Secretary's determination that caused an employer to lose qualifying-employer status because the employer has a substantial illegal purpose. That means you, as a borrower, cannot appeal that employer-focused determination through the borrower reconsideration process.
Evidence Standard and Presumptions for Employer Review
The Secretary will determine employer ineligibility by a preponderance of the evidence after notice and opportunity to respond, and will presume certain actions (for example, court judgments or plea agreements) are conclusive evidence of a substantial illegal purpose. The Department may rely on such judgments or plea agreements when deciding whether an employer is disqualified.
Department Must Notify Borrowers About Risk
The Department must notify borrowers if their qualifying employer is at risk of becoming, or becomes, ineligible for PSLF. You will receive notice so you know your employer’s status and can consider other employment if you want to preserve PSLF eligibility.
Personalized for You
How does this regulation affect your finances?
Personalize government policy and PRIA will tell you what this federal register document means for your household, plus every other regulation we track. PRIA reads each provision against your financial profile to show you exactly what matters to your wallet.
Key Dates
Related Federal Register Documents
2026-15019, Rescinding Portions of the Department of Education Title VI Regulations To Align With the Statutory Text and Conform to Executive Order 14281
The Department of Education is changing its rules to stop punishing unintentional discrimination under Title VI, focusing only on intentional discrimination instead. This update, effective July 24, 2026, will make things clearer, cut costs for schools and organizations getting federal money, and follow a new executive order about fairness and opportunity. If you receive federal funds, these changes affect how you follow civil rights rules.
2025-15665, William D. Ford Federal Direct Loan (Direct Loan) Program
The government wants to change the rules for the Public Service Loan Forgiveness program to stop people working for shady employers from getting loan forgiveness. This means if your job is with an organization involved in serious illegal activities, you won’t qualify for loan help anymore. These changes protect taxpayers and make sure the program is fair, coming soon to keep things on the up and up.
2026-16596, Unified Agenda of Federal Regulatory and Deregulatory Actions
The Secretary of Education publishes an l agenda of Federal regulatory and deregulatory actions. The agenda is issued under the authority of section 4(b) of Executive Order 12866, Regulatory Planning and Review. The purpose of the agenda is to encourage more effective public participation in the regulatory process by providing the public with early information about the regulatory actions we plan to take.
2026-16541, Agency Information Collection Activities; Comment Request; National Special Education Spending Study
The Department of Education wants your thoughts on a new survey about how special education money is spent across the country. Schools, districts, and anyone involved in special education will be part of this study, which aims to make sure funds are used wisely. You’ve got until October 13, 2026, to share your comments—so don’t miss out on shaping this important project!
2026-16222, Agency Information Collection Activities; Submission to the Office of Management and Budget for Review and Approval; Comment Request; Federal Work Study (FWS) Wages for Student Aid Index
In accordance with the Paperwork Reduction Act (PRA) of 1995, the Department is proposing an extension without change of a currently approved information collection request (ICR).
2026-16259, Notice Announcing Research Training Programs in the Education Sciences, Research Training Programs in Special Education, Statistical and Research Methodology in Education, Using Longitudinal Data To Support State Education Policymaking, and Using Longitudinal Data To Support State Education Policymaking in Special Education Program Competitions
The Institute of Education Sciences (IES) at the U.S. Department of Education (ED) is soliciting applications for new awards of the Fiscal Year (FY) 2027 Research Training Programs in the Education Sciences, Research Training Programs in Special Education, Statistical and Research Methodology in Education, Using Longitudinal Data to Support State Education Policymaking, and Using Longitudinal Data to Support State Education Policymaking in Special Education programs, Assistance Listing Numbers 84.305B, 84.324B, 84.305D, 84.305S and 84.324S.
Previous / Next Documents
Previous: 2025-19728, Priestia Megaterium Strain SYM36613; Exemption From the Requirement of a Tolerance
The EPA just gave a green light to Priestia megaterium strain SYM36613, meaning farmers can use it on food without worrying about residue limits. This change helps companies like Indigo Ag, Inc. by removing extra rules and saves time and money on testing. The new rule kicks in on October 31, 2025, but if anyone has concerns, they have until December 30, 2025, to speak up.
Next: 2025-19740, Implementation of the Administrative False Claims Act
Starting November 3, 2025, the Department of Homeland Security is updating how it handles cases of fraud to recover money and impose penalties. This change affects anyone involved in DHS programs by raising penalty amounts, clarifying rules, and letting special judges handle disputes. These updates come from a new law aiming to keep government funds safe and make the process smoother and fairer.