Public Service Loan Forgiveness PSLF

The College Cost Reduction and Access Act, signed in September 2007, created Public Service Loan Forgiveness to encourage careers in public service. Borrowers with federal Direct Loans who make 120 qualifying monthly payments, generally on an income-driven plan, while working full time for a government agency, the military, or a qualifying nonprofit can have their remaining balance forgiven tax-free. Teachers, nurses, police officers, public defenders, and many others qualify.

The first borrowers became eligible in 2017, and more than 99 percent of early applications were rejected because of confusing rules about loan types, repayment plans, and paperwork. Temporary waivers in 2021 and 2022, followed by permanent rule changes, counted many past payments, and the number of people forgiven grew to more than a million by early 2025. Borrowers can track progress and certify employment through the Education Department's online tools.

A rule finalized in October 2025 and effective July 1, 2026, lets the Education Secretary exclude employers found to have a substantial illegal purpose, such as aiding illegal immigration or illegal discrimination, and 21 states and D.C. sued, saying it lets the government punish groups for their views. Supporters of the rule say taxpayers should not subsidize organizations that break the law. Broader debates concern the program's cost, whether it favors graduate borrowers with large debts, and whether it helps recruit public workers.