- SAVE scheme is ending. Borrowers pursuing PSLF should switch to IBR or another eligible income-driven plan as soon as possible. The RAP scheme will launch on July 1, 2026, and will be the only option for new loans.
- New Parent PLUS borrowers will not have the PSLF pathway. Existing borrowers must consolidate by June 30, 2026, to maintain PSLF eligibility.
- A new employer eligibility rule will come into effect from July 1, 2026. The Department of Education may revoke PSLF eligibility for employers found to have a “substantial illegal purpose”, although fewer than 10 per year are expected to be affected.
Public Service Loan Forgiveness remains one of the best student loan forgiveness programs for federal student loan borrowers who work in the government or eligible nonprofits.
The main program hasn’t changed: You still must meet four requirements to have your loans forgiven. But the rules for those requirements are changing in 2026, and if you’ve been actively following the PSLF, you need to understand what’s different.
Here are the four pillars of PSLF eligibility and what’s changing with each.
1. You must have a direct loan
Only federal direct loans are eligible for PSLF. If you have old FFEL or Perkins loans, you will need to consolidate them into a Direct Consolidation Loan before any payments are calculated. This requirement has not changed, and there is no indication that it will.
One thing to keep in mind: If you consolidate, your payment number may reset. So if you’re already making qualifying payments on Direct loans, don’t consolidate them – only consolidate non-Direct loans.
Remember, if you consolidate an existing Direct Loan with the PSLF payment calculation, your new loan will have a weighted PSLF average.
2. You must be on an eligible repayment plan
This is where the biggest changes are happening in 2026. Here’s the short version: Income-driven repayment plans are changing, and you need to be on a qualifying plan.
The save plan has ended. Borrowers in SAVE forbearance are not able to make currently eligible PSLF payments, and time spent in forbearance does not count directly toward PSLF. If you are on SAVE, you must switch to an alternative income-driven repayment plan as soon as possible to resume earning credits for forgiveness.
Yes, PSLF buyback is an option, but it is not necessarily a financially sensible option.
A new scheme called RAP (Repayment Assistance Scheme) will launch on July 1, 2026. RAP will be the only income-driven scheme available for loans disbursed on or after that date. It calculates payments at 1-10% of your adjusted gross income (not discretionary income like IBR), requires a $10 minimum monthly payment, and offers forgiveness after 30 years. Payments under RAP count towards PSLF.
For existing borrowers: IBR remains available for loans disbursed before July 2026, unless you consolidate or take a new loan.
PAYE and ICR are being phased out and will end by June 30, 2028. Our final insight was that borrowers in these plans will likely need to choose a new plan in the fall of 2027 or early 2028.
The 10-Year Standard Repayment Plan is also eligible for PSLF, but since it is designed to pay off your loan in exactly 10 years, there is usually nothing left to be forgiven.
Bottom Line: If you are currently pursuing PSLF, confirm you are on IBR, PAYE, ICR or RAP – not SAVE. If you are taking a new loan after July 2026, RAP will be your way to go.
Parent PLUS loans are losing their PSLF path
This deserves its own section because it’s a big change that’s easy to overlook. The PSLF itself is not changing, but Parent PLUS borrowers lose access to the eligible repayment plan.
Currently, Parent PLUS borrowers can consolidate into a Direct Consolidation Loan and then enroll in ICR, which is eligible for PSLF. But the ICR expires by July 1, 2028, and the new RAP scheme will not be available for Parent Plus loans.
This means that after July 1, 2026, new Parent PLUS borrowers will have no income-driven repayment options and therefore no path to PSLF.
If you already have a Parent PLUS Loan, there is a time limit. You must consolidate into a Direct Consolidation Loan and enroll in ICR by June 30, 2026. After making at least one eligible ICR payment, you can switch to IBR before ICR sunset in 2028.
Comment: To complete the consolidation by June 30, 2026, it is recommended that you start the process before March 31, 2026.
If you miss this window, you’ll be stuck on standard repayment with no forgiveness pathway.
3. You must work for a qualified employer
To receive PSLF, you must work for a qualifying employer. This basic requirement has not changed.
Qualified employment means working full-time for a government organization (federal, state, local, or tribal) or 501(c)(3) nonprofit organization. You must also average 30 hours per week (to be considered full-time).
What’s new: The “substantial unlawful purpose” rule will come into effect from July 1, 2026. Under this rule, the Department of Education can revoke PSLF eligibility for any employer (including universities and nonprofits) found to have a “substantial illegal purpose.”
The rule lists examples such as aiding violations of federal immigration laws, supporting terrorism, certain medical procedures involving minors in violation of law, trafficking and repeated violations of state law.
The Department estimates that fewer than 10 employers will be disqualified per year. An ineligible employer loses eligibility.
What does it mean to you: For most borrowers, this won’t change anything. But if you work for an organization that could be politically targeted under this rule, it’s worth monitoring.
It is also important to note that previous qualifying payments cannot be cancelled. Your employer will only be disqualified in the future. So you will know in advance and have time to change employer if you wish.
4. You have to make and authenticate 120 eligible payments
You need 120 qualifying monthly payments (10 years’ worth) made while working full-time for a qualifying employer and enrolled in a qualifying repayment plan. Payments do not have to be consecutive.
Submit your PSLF form at least annually and every time you change employers. It certifies your employment and tracks your payment numbers. Don’t wait until you reach 120 payments to submit the first time, annual certification helps catch errors early and keep your counts accurate. You can monitor your Green Banner in your StudentAid account.
After 120 certified qualifying payments, you submit the PSLF form one final time to request forgiveness. Any remaining balance is forgiven tax-free.
key takeaways
If you are on the SAVE plan: Switch to IBR or any other eligible income-driven plan immediately. Time on SAVE is not currently counting toward PSLF. You’re wasting time (and potentially money) by waiting.
If you have Parent PLUS loans: Consolidate into a Direct Consolidation Loan and enroll in ICR before June 30, 2026. Then plan to switch to IBR before ICR sunset in 2028.
If you are taking new loans after July 2026: RAP will be your only income-driven option to qualify for PSLF.
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