The Trump administration has given up its fight over who counts as a qualifying employer for Public Service Loan Forgiveness. The Justice Department filed papers on Oct. 22, 2026 to dismiss the government’s appeal, which leaves in place a June federal court ruling that threw out the Education Department’s rule. For teachers, nurses, firefighters and nonprofit workers chasing forgiveness, the rule that would have let Washington disqualify some employers is dead.

The rule was finalized in 2025. It would have let Education Secretary Linda McMahon cut off forgiveness for people who work at government or nonprofit employers she found to have a “substantial illegal purpose,” according to coverage from the Associated Press. The examples cited included aiding violations of federal immigration law, supporting terrorism, illegal discrimination and certain gender-related care for minors.

What it means for borrowers working in public service

For a borrower who works for a school district, a city, a hospital system or a charity, nothing in the ruling adds a new test. It removes one that was proposed. Congress created the program in 2007 with bipartisan support, and Washington’s release describes it as forgiving remaining federal student loans for borrowers who make 10 years of qualifying payments while working in public service.

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AP reports that PSLF has canceled debt for more than 1 million borrowers since it began. Those borrowers, and the many still on the way to 120 payments, were the people the rule was written to reach.

The practical check for anyone in the program is the same as before the rule. Confirm that the employer still counts as a qualifying one, that the loans are in a plan that counts, and that the servicer’s payment count matches personal records.

The plan matters as much as the employer. Federal Student Aid’s SAVE plan page lists Income-Based Repayment, Income-Contingent Repayment, Pay As You Earn and the Repayment Assistance Plan as PSLF-qualifying plans, and states that payments under the Tiered Standard Plan do not count toward PSLF. Borrowers being moved off the ended SAVE plan should check which plan they land in, because time in the SAVE forbearance does not earn PSLF credit either.

What the court threw out

Twenty-two attorneys general sued in November 2025 in the U.S. District Court for the District of Massachusetts. Washington’s attorney general says the rule “would have let the federal administration remove loan forgiveness eligibility from employees of government and nonprofit organizations it disfavors, based on vague, unsupported allegations of wrongdoing.”

The court vacated the rule in June 2026. Washington’s announcement of the win says the judge found it contrary to law, arbitrary and capricious, beyond the Education Department’s authority under the statute, and a violation of the First Amendment. California’s attorney general adds that the standard was ambiguous and aimed at lawful activity, such as legal services for immigrants and civil protest.

The coalition says the administration’s choice to drop the appeal concedes the case. The government gave no reason, according to AP. California Attorney General Rob Bonta’s office says the same thing in its release, which describes the dropped appeal as leaving the District Court’s ruling in place.

What the Oct. 22 filing does

The stipulation of dismissal was filed in the U.S. Court of Appeals for the First Circuit in Commonwealth of Massachusetts v. U.S. Department of Education, No. 26-1973. Simon G. Jerome of the Justice Department’s Civil Division appellate staff signed for the government. The parties agreed to dismiss under Federal Rule of Appellate Procedure 42(b)(1), and each side agreed to bear its own fees and costs.

That ends the appeal in the states’ case. AP reported that the administration dropped two appeals in all, one in the states’ lawsuit and one in a separate case brought by cities, nonprofit groups and other plaintiffs, and that neither side gave a reason in the joint agreements. The lower court rulings stand in both.

AP put the agreements on Wednesday, Oct. 21. The court filing and both state attorney general releases carry Oct. 22.

What the lawyers and attorneys general said

Washington Attorney General Nick Brown said, “Across Washington and throughout the country, people have made the choice to pursue careers in public service.” He added that “our coalition successfully blocked this illegal attempt by the federal administration to withhold loan forgiveness.”

California Attorney General Rob Bonta said, “The Trump Administration tried and failed to turn a bipartisan promise into a political weapon.” Dan Zibel, an attorney for Student Defense, called the outcome a “significant victory for millions of Americans who have dedicated their careers to public service,” per AP coverage on WJLA.

Cormac Early, lead attorney for the plaintiffs at Public Citizen Litigation Group, said the administration “never had a legal basis for politicizing the public service loan forgiveness program.” California’s attorney general release says the state’s commitment to public servants “remains unchanged.”

Years into PSLF with a balance still owed?

Forgiveness takes 10 years, and a long stretch of payments is also a long stretch of servicer transfers, rule changes and notices that go astray. Borrowers who cannot show their own payment history are the ones left arguing with a servicer after a mistake.

The Bank Account & Debt Protection Kit is a 75-page guide that includes a debt inventory, call log and deadline tracker, so each loan, balance, call and date sits in one place. It also lays out the debt-validation steps for making a collector prove a debt. It says nothing about which employers qualify for PSLF; that question belongs to the Education Department.

Get the PSLF loan call log and deadline tracker →

This article was produced with AI assistance and edited for accuracy against the sources linked above.