PSLF Employer Rule: Appeals Dropped, What Borrowers Should Do
PSLF was all over Google Trends in the US this week, and the reason is a very short court filing. On Wednesday, October 21, the Justice Department dropped two of its three appeals over the Education Department’s PSLF employer rule. If you work at a school, hospital or nonprofit and you’re counting payments toward forgiveness, that filing matters to you.
I read The College Investor’s write-up, the Baltimore Chronicle’s piece (which leans on AP reporting), and the AP coverage of the June 30 rulings that started all this. They mostly say the same thing in different words, so I pulled out the parts a borrower can actually use.
Here’s the short answer. The rule is still blocked, so nothing changes for your PSLF count today. One appeal is still open, though, and I wouldn’t call this over until the next court deadline on November 4 passes.
What happened in court on October 21
Still, the filings themselves are tiny. Reports describe them as one-sentence joint agreements, where each side pays its own legal fees. Also, the government gave no reason. That’s the part I keep coming back to, because a reversal this quiet leaves plenty of room for guessing.
Three lawsuits challenged the rule, and the government had appealed all three in August. Here is where each one stands now.
| Case | Who sued | Appeal court | Status |
|---|---|---|---|
| Robert F. Kennedy Center for Justice and Human Rights v. McMahon (No. 26-5308) | Nonprofit groups | D.C. Circuit | Dropped |
| National Council of Nonprofits v. McMahon (No. 26-1972) | Nonprofits, unions and cities | First Circuit | Dropped |
| Commonwealth of Massachusetts v. Department of Education (No. 26-1973) | States and D.C. | First Circuit | Still pending, government brief due November 4 |
Why the states’ case is the one to watch
According to The College Investor, Judge Myong Joun’s Massachusetts ruling vacated the rule nationwide. In that ruling, he found it contrary to law, arbitrary and capricious, and a First Amendment problem. So the states’ appeal is now the government’s only path to bring the rule back.
If the government files a dismissal instead of a brief, the June 30 rulings become final. Coverage says that looks likely, since the other two appeals were dropped the same day. Likely isn’t the same as done, though.
What the PSLF employer rule would have done
The Education Department finalized the rule on October 31, 2025. It would have let the Education Secretary declare an employer ineligible for PSLF if the department decided the organization had a “substantial illegal purpose.” For example, the activities named included aiding violations of immigration law, supporting terrorism, illegal discrimination and certain gender-related care for minors.
For borrowers, the catch was the timing. Anyone working for a disqualified employer would have stopped earning qualifying payments after the determination date.
Who was most exposed
However, critics said the rule aimed at groups that support immigrants or transgender youth, and that it could reach schools, public hospitals and legal aid groups too. The College Investor adds that some workers at immigration legal aid groups, health systems and advocacy nonprofits were weighing job changes to protect their progress.
What bothered me wasn’t the list of banned activities. It was that one official would make the call, and a borrower could lose months of progress over a decision they had no part in. Ten years of payments is a long time to build on a rule someone else can rewrite.
What this means for your PSLF count
Do you need to do anything?
No. Instead, the existing employer rules stay in place. Government organizations and 501(c)(3) nonprofits still qualify, and the basic deal hasn’t moved: 120 qualifying monthly payments on Direct Loans while you work full time for a qualifying employer. According to AP reporting cited by the Baltimore Chronicle, PSLF has canceled debt for more than 1 million borrowers since 2007.
Should you stay or switch jobs?
If this rule was the only thing pushing you out the door, you can stop worrying about it for now. A vacated rule can’t be enforced, so your employer can’t be disqualified under it.
Still, I wouldn’t treat the question as settled forever. The filings don’t say whether the department plans a different approach, and when the courts ruled in June, an Education Department official said the department was evaluating next steps. Here’s how I’d think about it by situation.
| Your situation | What I’d do |
|---|---|
| School, hospital or government job | Nothing new. Keep certifying your employment every year. |
| Immigration, legal aid or advocacy nonprofit | Same routine, plus keep your own paper trail. The rule is blocked, not rewritten. |
| Considering a job change because of this rule | Hold off until after November 4, unless you have other reasons to leave. |
| Not sure your repayment plan counts | Check your plan on StudentAid.gov before the next certification. |
A 15-minute PSLF check you can do this week
- Certify your employment. Use the PSLF Help Tool at least once a year, and again after any job change.
- Save your own records. Keep pay stubs, W-2s and payment confirmations in case your payment count is ever questioned.
- Confirm your plan counts. The College Investor lists the Repayment Assistance Plan, IBR, PAYE and ICR as qualifying plans.
- Ask HR for help. Many public employers can sign certification forms and answer eligibility questions.
- Skip paid PSLF help. Applying through Federal Student Aid is free, so be wary of anyone charging to “enroll” you.
What I’m watching next
First, there’s the November 4 deadline in the states’ case. A dismissal would make the June rulings final. A brief would mean the government still wants to fight. Second, whether the department proposes a new rule down the road. However, it hasn’t said anything about that yet.
My read is simple. If the dismissal shows up, the practical risk to your count drops a lot. If a brief shows up instead, that’s when I’d start paying close attention again.
PSLF employer rule FAQ
Is the PSLF employer rule in effect?
No. Courts vacated it on June 30, 2026, and the government has dropped two of its three appeals. It stays vacated unless the First Circuit reverses the states’ case.
Can the rule come back?
The only open route is the states’ appeal. Besides that, the department could also write a new rule someday, but nothing in the filings says it plans to.
Do I need to resubmit my employment forms?
No special form is needed. Instead, just keep certifying on your usual schedule.
Does this change PSLF for nonprofit workers?
No. Eligibility works the way it did before the 2025 rule, so 501(c)(3) employees keep earning qualifying payments.
The short version
The government dropped two of its three appeals over the PSLF employer rule on October 21, 2026, so the rule stays blocked and your qualifying payments are unaffected. Keep certifying your employment every year, and watch the states’ case, where the next deadline is November 4.
