One year ago today, the U.S. Department of Education published a rule giving Secretary Linda McMahon power over Public Service Loan Forgiveness eligibility. She could cut off any employer she decided had a "substantial illegal purpose." The categories named in the rule included aiding violations of immigration law, illegal discrimination, and certain gender-related care for minors. The employers exposed to that judgment included state governments, hospitals, nonprofits, and public school districts.

For a teacher in year eight of the program's ten-year track, the rule meant the finish line could move because of a finding about her district rather than anything she did in a classroom. It was scheduled to take effect July 1, 2026, and it never did.

On October 22, a Justice Department appellate lawyer filed a one-page joint stipulation in the First Circuit dismissing the government's appeal in Commonwealth of Massachusetts v. U.S. Department of Education. New York Attorney General Letitia James says she led that case alongside 22 other attorneys general. A day earlier, the government had dropped its appeals in two parallel cases brought by nonprofits, unions, and cities. Each side agreed to bear its own fees, and none of the filings offered a reason.

For teachers, a public school district remains a qualifying employer under the definition that existed before the rule, and no one's payment count changes because of the litigation. The deadline actually bearing down on educators is attached to the end of the SAVE repayment plan. Servicers are mailing notices that give each borrower 90 days to choose a new plan before the government chooses one for them.

How the employer rule came apart

The states filed suit in November 2025, within days of publication. On June 30, 2026, one day before the effective date, Judge Myong J. Joun of the federal district court in Massachusetts granted summary judgment to the coalition and vacated the rule. He held that it was contrary to law, arbitrary and capricious, beyond the department's statutory authority, and a violation of the First Amendment. A federal judge in Washington vacated it separately in the nonprofit case brought there.

James framed the June ruling in terms aimed squarely at the people who staff New York's schools. "Public servants should not have to pass a political loyalty test to earn the loan forgiveness they were promised," she said in a statement from her office. "This rule was a blatant attempt to punish teachers, nurses, firefighters, social workers, and other public servants for working in states or for organizations that this administration does not like."

The government filed notices of appeal in late August, just inside the 60-day window, and its opening brief in the states' case was due November 4. It dropped the case two weeks before that brief came due. Michigan Attorney General Dana Nessel, a coalition member, addressed educators directly in her office's October 26 release. "Teachers, government employees, nonprofit workers, and others who serve the public should be able to count on the rules Congress established, not worry that an administration will change them to target disfavored work," she said.

A dismissed appeal ends this rule, and the district court's First Amendment holding stands as a marker any future attempt would have to get past. Minnesota Attorney General Keith Ellison closed his own announcement with a promise that he would "remain vigilant about any future attempts to politicize or weaponize it."

The clock that is still running

A court order ended the SAVE plan in March 2026, and every borrower enrolled in it has to move. According to Federal Student Aid's guidance for SAVE borrowers, servicers began sending transition notices on July 1 and are working through borrowers in batches. Every SAVE borrower is scheduled to be notified before the end of 2026, so two teachers with the same servicer can be living under entirely different deadlines.

The window opens on the date the servicer notice arrives. A borrower has 90 days to select a plan, and if nothing happens in that time the servicer sends a final 30-day notice. When that second period lapses, the borrower is placed automatically on the Standard Repayment Plan. Anyone holding a loan disbursed on or after July 1, 2026 that has entered repayment lands on the newer Tiered Standard Plan instead. A notice that arrived July 1 carried a September 29 deadline, while one arriving today runs out on January 29, 2027, before the final notice adds its 30 days.

Most notices arrive by email, and the department suggests searching an inbox for the subject line "You Have 90 Days to Select a New Repayment Plan" or for the later "Final Notice" message. A teacher who asked for paper correspondence will get the notice by mail instead, which is a good reason to open the servicer's own website and check its message center this weekend.

Why the default plan undercuts forgiveness

Federal Student Aid states directly that payments under the Tiered Standard Plan do not count toward PSLF. It recommends that borrowers pursuing forgiveness apply for a different plan before they are moved into it. The ordinary ten-year Standard plan does produce qualifying payments, but it is built to retire the full balance in a decade. That leaves a teacher with little or nothing to forgive at the moment the program was supposed to pay off.

Time already spent parked in the SAVE forbearance also earns no PSLF credit, a point that catches borrowers who assumed the count kept moving while payments were paused. The department allows a buyback of those months once a borrower reaches 120 months of qualifying employment. It also notes that starting payments on an eligible plan now is the faster route to 120. Payments that already qualified before the forbearance stay on the books regardless of which plan comes next.

Choosing a plan that keeps the count moving

Every income-driven plan still on the menu counts toward PSLF. Income-Based Repayment charges 10 percent of discretionary income for borrowers whose first loan came on or after July 1, 2014, and 15 percent for older borrowers. Pay As You Earn charges 10 percent, and Income-Contingent Repayment can run as high as 20 percent. The department says both of those plans will end no later than July 1, 2028, so a teacher who picks either one should expect to move again before reaching ten years.

The Repayment Assistance Plan, open to Direct Loans disbursed at any time, sets annual payments at 1 to 10 percent of adjusted gross income. That figure is divided by twelve, reduced by $50 a month for each dependent on the tax return, and never drops below $10. Its formal term is 30 years, which is irrelevant to someone pursuing PSLF, since forgiveness arrives at 120 qualifying payments. For a household with children and a single teaching salary, the dependent deduction can make RAP the cheapest qualifying option on the list.

New York's average teacher pay of $98,655, which we examined in our August guide to PSLF payment-count cuts, sits high on the RAP scale. A second income on a joint return can push a household into the top bracket. The department's Repayment Calculator imports loan and income data after a borrower logs in, and running it for IBR and RAP side by side takes less time than a faculty meeting.

Borrowers enrolled in auto pay by December 31, 2026 receive a 1 percent interest rate reduction through June 30, 2028. Consolidation, often suggested for teachers carrying older FFEL or Perkins loans, averages qualifying payments by balance. In the department's own example, a $30,000 loan with 60 qualifying payments merged with a $30,000 loan carrying none produces a new loan credited with 30.

The paperwork that protects a decade of service

The department recommends submitting a PSLF employment certification every year and whenever a borrower changes jobs, and a district human resources office signs the employer section. The PSLF Help Tool on StudentAid.gov confirms whether loans and employment qualify before the form goes in. A teacher who moved from a district in Rochester to one on Long Island should certify both stretches separately rather than leaving the first job to be reconstructed years later.

The same habit of documentation that mattered during this summer's payment-count reductions applies here. Save the servicer notice with its date visible, save the confirmation when a new plan is approved, and keep a screenshot of the qualifying count from before and after the switch. New York's Department of Financial Services licenses and supervises the student loan servicers operating in the state. That gives borrowers here an escalation route beyond the servicer itself if a count or plan placement goes wrong.

The November 4 brief that once hung over the employer rule will never be filed. Every SAVE borrower should have a notice by the end of 2026, the auto pay cutoff falls on December 31, and PAYE and ICR close on July 1, 2028.