Some nonprofit organizations could soon be excluded from the Public Service Loan Forgiveness program if it is determined the organization has a substantial illegal purpose.
Although the final regulations were published October 31, 2025, the Department of Education just recently posted the information on the What’s New area of the Knowledge Center – likely delayed due to the government shutdown last fall.
Through new or clarifying provisions, the changes will impact borrowers and employers and, according to the Secretary of the U.S. Department of Education, will ensure that taxpayer dollars are not misused by preventing PSLF benefits from going to individuals employed by organizations that have a substantial illegal purpose.
Some of the changes include:
- excluding employers that engage in specific enumerated illegal activities such that they have a substantial illegal purpose, including defining obligations and processes tied to making such a determination of an employer.
- clarifying that borrowers will receive full credit for work performed, until the effective date of the Secretary’s determination that an employer is no longer a qualifying employer under the rule.
- establishing methods for an employer to regain eligibility following a determination of ineligibility by the Secretary.
