Education Department Appeals Court Decisions on PSLF Employer Rule
Legal battle continues over employer eligibility in student loan forgiveness program.
1Legal Process Initiated
The Department of Education filed appeals on August 27, 2026, challenging two court decisions that struck down the PSLF employer eligibility rule. In Massachusetts, Judge Myong J. Joun's 68-page ruling declared the rule 'contrary to law, arbitrary and capricious, and a violation of the First Amendment.' The DC District Court similarly blocked the rule's implementation through summary judgment, just one day before its scheduled effective date.
2Parties and Appeals
The lawsuits involved 22 states, DC, five cities and counties, and multiple nonprofits against the Education Department. With courts completely vacating the rule rather than pausing it, the Department filed appeals on the final day of the 60-day window. The cases now move to the First Circuit and DC Circuit Courts of Appeals, with briefing expected to continue through late 2026.
3Controversial Rule Provisions
The overturned rule would have allowed the Education Secretary to disqualify employers engaged in 'activities with a substantial illegal purpose.' Plaintiffs argued this vague standard reflected political priorities on immigration, gender-affirming care, and DEI rather than established law. Public service workers like teachers and nurses risked losing forgiveness credit if their employers were removed from PSLF eligibility.
4Current Status and Next Steps
Since courts fully vacated the rule, existing PSLF employer standards remain in effect during appeals. The process may extend into 2027, with potential Supreme Court involvement if the Department loses. Borrowers should continue submitting employment certifications normally. The Department could seek stays of the vacatur, but none were filed as of August 27.
5Appeal Process Details
The Department's two-page notices of appeal contain no substantive arguments yet. Over 100 amicus briefs supported challengers in the Massachusetts case, with none backing the Department. While parties may request stays during appeals, the vacated rule currently has no effect unless revived. The Department previously attempted to add a perjury attestation to PSLF forms during litigation, which was blocked.
6Regulatory Background
Finalized on October 31, 2025, the PSLF employer rule faced lawsuits within three days from local governments, then states and nonprofits. It formed part of broader student loan reforms including the RAP plan and Parent PLUS changes. The rule's fate impacts hundreds of thousands of public service workers counting on loan forgiveness after a decade of qualifying payments.
7Borrower Risks
While current rulings don't immediately affect borrowers, a successful appeal could reintroduce uncertainty. The Department would need rapid action to implement the rule without disrupting borrowers' progress toward forgiveness. Experts emphasize maintaining regular employment certification submissions. The litigation's outcome may influence other pending student loan policy changes.
8Broader Implications
This case tests limits of executive branch authority over student loan policies. Its resolution could shape not just PSLF but broader administrative state powers. Legal scholars note such challenges may redefine agency rulemaking boundaries. With decisions potentially years away, the battle represents a pivotal moment in education policy and administrative law interpretation.