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.
Your PRIA Score
Personalized for You
How does this regulation affect your finances?
Sign up for a PRIA Policy Scan to see your personalized alignment score for this federal register document and every other regulation we track. We analyze your financial profile against policy provisions to show you exactly what matters to your wallet.
Key Dates
Related Federal Register Documents
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.
2026-06539 — Agency Information Collection Activities; Comment Request; Annual Report of Children in State Agency and Locally Operated Institutions for Neglected and Delinquent Children
The Department of Education wants to keep collecting yearly info about kids in state and local institutions for neglected or delinquent children, with no changes to the current form. This affects state agencies and local places that care for these kids, and they’re asking for public comments by April 3, 2026. There’s no new cost or extra paperwork, just a smooth extension to keep tracking important data.
2026-06491 — Agency Information Collection Activities; Submission to the Office of Management and Budget for Review and Approval; Comment Request; Demonstration Grants for Indian Children and Youth Program Grant Application Package (1894-0001)
The Department of Education wants to keep collecting info for the Demonstration Grants for Indian Children and Youth program without changing the current forms. This affects states, local groups, and tribes applying for these grants, helping them support Native kids and youth. You’ve got until May 4, 2026, to share your thoughts, and no new costs or changes are planned right now.
2026-06456 — Notice Announcing Educational Opportunity Centers Program Competition
The Department of Labor and Education are inviting groups to apply for grants to run Educational Opportunity Centers that help people get into college and understand money better. Applications are due by May 14, 2026, and winners can get up to $1.3 million a year to support their programs. This is a great chance for organizations to expand education access and help more students succeed!
2026-06436 — Title: Competition Announcement; Parent Information and Training Program
The Department of Education is offering grants for 2026 to support Parent Information and Training Centers that help families of individuals with disabilities. One new center will be funded in the Midwest region (Iowa, Kansas, Missouri, Montana, Nebraska, North Dakota, South Dakota, Wyoming). Interested groups must apply online by April 24, 2026, to get a chance at this funding.
2026-06438 — Proposed Waivers and Extensions of the Project Period With Funding for the American Indian Vocational Rehabilitation Services Program and the American Indian Vocational Rehabilitation Training and Technical Assistance Center
The Department of Education wants to give 43 American Indian Vocational Rehabilitation projects and one training center extra time and money beyond their usual 5-year limit, extending support through September 30, 2027. This means these programs can keep helping American Indian communities with job training and support without interruption. People have until May 4, 2026, to share their thoughts on this plan.
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.
Take It Personal
Get Your Personalized Policy View
Start a Free Government Policy Watch to see how policy affects your household, then upgrade to PRIA Full Coverage for year-round monitoring.
Already have an account? Sign in