The Department of Education’s new rule for the Public Service Loan Forgiveness (PSLF) program is facing legal challenges from a coalition of states. The rule, set to take effect on July 1, 2026 introduces a sworn attestation requiring employers to confirm they haven’t engaged in activities with a substantial illegal purpose.
This change has sparked controversy, with states arguing that the rule is vague and exceeds the Department’s authority. The outcome of this legal battle could significantly impact over one million borrowers who have benefited from the PSLF program.
States File Legal Challenge
On June 22, 2026 plaintiffs filed a notice of supplemental authority, pointing the court to a June 18 Federal Register notice. The notice requested an emergency clearance to revise the PSLF and TEPSLF certification form, with the Office of Management and Budget asked to sign off by June 26.
The revised form includes an attestation under penalty of perjury, stating that the employer has not engaged in any activity that has a substantial illegal purpose on or after July 1, 2026. The states argue that this filing demonstrates the rule’s imminence and renewed their request for the court to rule on their pending summary judgment motions before the July 1 effective date.
The Controversial Rule
The rule emerged from a negotiated rulemaking process that ended without consensus. It lists specific illegal purposes including aiding illegal immigration, supporting terrorism, certain medical procedures for minors, and illegal discrimination. Plaintiffs contend that the standard is vague and pretextual, exceeding the Department’s authority under the PSLF statute.
The PSLF program has already canceled more than $85 billion in federal student loans for over one million borrowers. The Department estimates that the revised certification form covers roughly 913,713 responses a year. The core risk for borrowers is that if their employer is deemed to have a substantial illegal purpose they could lose eligibility for loan forgiveness.
Potential Impact on Borrowers
The Department of Education’s request for OMB approval by June 26 with the rule set to take effect on July 1 has heightened the stakes. The judge could rule on the states’ summary judgment motions at any point, and the plaintiffs are eager for a decision before the deadline.
This legal battle underscores the importance of the PSLF program for public service workers. The outcome will determine whether the new attestation requirement stands or falls, potentially affecting the loan forgiveness prospects of hundreds of thousands of borrowers.
