Many Public Service Loan Forgiveness borrowers believed they had successfully avoided a bullet on June 30, 2026, when a ruling which would have struck certain employers from the forgiveness list was dismissed by not one but two federal judges. As it happened, it was not the end. The Education Department recently filed an appeal, leaving teachers, social workers and nonprofit employees across the country facing another round of legal limbo.
In this article, we’ll explore what actually got filed, what the courts already ruled, whether your qualifying payments are in danger right now, and what you should be doing regardless of how this plays out.
If you’ve been paying attention to PSLF news for a while, you know that this program has experienced more litigation in the past two years than its entire history prior. This latest appeal is just part of the narrative not the end of it.
What Just Happened With the Appeal
Through the Justice Department, the Education Department filed notices of appeal on August 27, 2026, in both cases that had struck down its PSLF employer eligibility rule. They filed right at the wire, just before their window to appeal closed for good.
Two Cases, Two Different Courts
The first case, National Council of Nonprofits v. McMahon, is headed to the First Circuit Court of Appeals. The second, Robert F. Kennedy Center for Justice and Human Rights v. McMahon, goes to the D.C. Circuit. Both appeals target the same date, June 30, 2026, one day before the rule was supposed to kick in.
No One’s Asked to Pause Anything — Not Yet
Here’s what a lot of borrowers get wrong: the Department could ask the appeals courts to freeze the vacatur while the case gets argued. As of late August, neither docket showed a stay request. And just filing an appeal doesn’t magically bring a dead rule back to life. If you want the real-time status, the Federal Student Aid PSLF page tells you what’s actually in effect, not what the Department wishes were in effect.
That distinction between “filed an appeal” and “won the appeal” trips up a lot of people scanning headlines. A notice of appeal is a procedural step, nothing more. It puts a case on a docket; it doesn’t change a single thing about your monthly payment count or your employer’s status today.
Where This Rule Came From in the First Place
To make sense of the appeal, you need to know what it’s trying to save.
The rule hit the Federal Register on October 31, 2025, tucked under Docket ID ED-2025-OPE-0016, amending 34 CFR 685.219. Its whole purpose was to let the Department knock employers off the PSLF-qualifying list if they were tied to what the rule called a “substantial illegal purpose.” It grew out of a March 2025 executive order aimed at “restoring” PSLF, and after roughly 14,000 public comments rolled in, the Department finalized it almost exactly as proposed, with a planned effective date of July 1, 2026.
What Would’ve Changed for Borrowers
- It created a brand-new legal test, “substantial illegal purpose”, for deciding which employers still counted toward forgiveness.
- Starting July 1, 2026, anyone working for a flagged employer would’ve stopped racking up qualifying payments unless they found a new job. Employers got a notice-and-response process, and the PSLF Help Tool database was supposed to update within 30 days of a ruling. However, borrowers themselves had no way to appeal a decision made about their own employer.
- The Department pegged the projected savings at roughly $1.616 billion, a figure confirmed in a Government Accountability Office review. Translation: that “savings” was just forgiveness borrowers wouldn’t have gotten.
Why Judges Killed the Rule Twice in One Day
U.S. District Judge Myong J. Joun in Massachusetts wrote a 68-page opinion on June 30, 2026, calling the rule contrary to law, arbitrary and capricious, outside the Department’s legal authority, and a First Amendment violation. He wiped it out entirely. His ruling also folded in a related lawsuit brought by 22 states plus D.C., and the judge said the rule was so vague it basically forced employers to publicly agree that all DEI work is illegal, thereby treating a political opinion as if it were settled law.
That same day, a federal court in Washington, D.C. reached the same conclusion in the Robert F. Kennedy Center case. Both rulings apply nationwide.
Does the Appeal Change Anything Right Now?
Nope. As things stand today:
- The employer rules haven’t budged even though government agencies and 501(c)(3) nonprofits still qualify, and no “substantial illegal purpose” test applies unless an appeals court says otherwise.
- The rule is vacated everywhere and never took effect, so keep certifying your employment and tracking your payment count through the PSLF Help Tool like you always have.
- The Department had also tried sneaking a perjury attestation onto the PSLF employer form while the lawsuits were pending. That got scrapped along with the rule, and a July 2026 Federal Register notice confirmed the Department pulled it to comply with the court’s order.
How Long Will This Drag On?
Both cases now head into the appeals process, with legal briefs likely stretching into late 2026 and rulings possibly landing sometime in 2027. If the Department loses again, expect a Supreme Court petition to follow. Bottom line: this is a years-long fight, not something wrapping up next month.
PSLF Borrowers Are Getting Squeezed From Multiple Directions
This appeal isn’t happening in a vacuum. Advocacy groups working with borrowers say the Department’s shifting stance on PSLF credit could stretch out debt for public workers and, in worst-case scenarios, even undo forgiveness that already went through. Plenty of teachers and nurses have logged in only to see their payment counts drop with zero warning. The Department blames data errors left over from the last administration; advocates say legitimately earned credit is getting yanked, forcing people who did everything right to make extra payments they shouldn’t owe.
On top of that, the whole repayment system shifted underneath everyone at the same time. The SAVE plan is gone, and the Repayment Assistance Plan (RAP) took over on July 1, 2026, changing how PSLF strategy works going forward. Killing PSLF entirely would take an act of Congress, and the One Big Beautiful Bill Act left the program intact. What the Department can mess with is the machinery underneath it: which plans count toward your 120 payments, how loan buyback gets priced, and how fast your paperwork actually gets processed. The Consumer Financial Protection Bureau runs a neutral forgiveness resource worth bookmarking while all of this keeps shifting.
A Different Case the Department Already Lost for Good
It’s easy to mix up this PSLF fight with the separate borrower defense litigation. They’re not the same case, and the second one is basically settled.
- On July 17, 2026, a unanimous three-judge panel on the Ninth Circuit shot down the Department’s attempt to stretch out deadlines tied to borrower defense claims, leaving the lower court’s rulings standing and preserving relief for more than 170,000 borrowers. The Project on Predatory Student Lending tracks every filing if you want the paper trail.
- Sweet v. McMahon now holds the record for the largest settlement ever reached against the federal government, somewhere north of $23 billion in relief.
- Full relief under that settlement wipes out the remaining balance, refunds every payment you already made, and erases the loan from your credit report entirely.
The pattern here matters: an appeal filed by the Department isn’t proof it’s winning. It’s lost this exact style of argument twice at the trial-court level and once at the Ninth Circuit.
What PSLF Still Offers, Despite the Chaos
Even with all this legal back-and-forth, PSLF remains one of the best deals available to anyone in public service:
- Total forgiveness of your remaining Direct Loan balance after 120 qualifying monthly payments while working full-time in a public service job.
- No federal tax bill on the forgiven amount, unlike a lot of other cancellation programs.
- A path through consolidation where only Direct Loans count natively, but Perkins and FFEL borrowers can consolidate into a Direct Consolidation Loan and start earning credit from there.
- A trackable record where the PSLF Help Tool tells you if your employer counts, and your progress shows up right in the “My Aid” tab of your StudentAid.gov account.
- A real appeals path of your own. That way, if your application gets denied, you can push back through your servicer, file a reconsideration request, or bring in the FSA Ombudsman.
If you’re still figuring out how to fund school and want to sidestep heavy borrowing altogether, it’s worth looking at scholarship options built for U.S. students that wipe out tuition debt from day one, along with fully funded programs designed for college students who qualify.
Steps to Protect the Credit You’ve Already Earned
- Keep certifying your employment. Do it now, and keep doing it. Certified months are the hardest thing for any future rule to take back.
- Screenshot your payment count every single time you check it. Borrowers have seen counts shift with no notice.
- Build an offline paper trail. Pay stubs, W-2s, dated offer letters, and copies of every certification form you’ve submitted.
- If you work somewhere politically sensitive, document even more carefully. Government jobs at any level (federal, state, local, tribal) aren’t touched by any of this either way.
- Double-check your repayment plan still counts now that SAVE is gone and RAP has taken over.
- Keep an eye on both dockets for any stay request, and check the FSA Partners Knowledge Center for anything official.
Quick Timeline
- March 2025 — Executive order calls for rewriting who counts as a qualifying PSLF employer.
- August 2025 — Proposed rule drops; almost 14,000 public comments come in.
- October 31, 2025 — Final rule published, set to take effect July 1, 2026.
- Within three days — Lawsuits start rolling in, cities and counties first, then states and nonprofits.
- June 30, 2026 — Courts in Massachusetts and D.C. both vacate the rule nationwide.
- July 17, 2026 — Ninth Circuit rejects the Department’s separate borrower defense appeal.
- August 2026 — Reports surface of PSLF payment counts dropping unexpectedly.
- August 27, 2026 — Notices of appeal filed in the First and D.C. Circuits.
Frequently Asked Questions
What’s this appeal actually about?
It’s the Department’s August 27, 2026 filing challenging two court rulings that struck down its PSLF employer eligibility rule. The Department wants the First Circuit and D.C. Circuit to bring back a regulation that would’ve let it disqualify certain employers from PSLF.
Did the employer rule ever actually take effect?
No. Courts vacated it nationwide on June 30, 2026, one day before it was supposed to start. Filing an appeal doesn’t bring a vacated rule back on its own.
Could the rule come back while the appeal is pending?
Only if an appeals court grants a stay of the vacatur. No such request had been filed as of late August 2026. If that changes, it could change fast — so check official Federal Student Aid updates rather than relying on social media chatter.
Which employers still count toward PSLF?
Government agencies and 501(c)(3) nonprofits, same as always. No “substantial illegal purpose” test currently applies. You still need to work full-time for a qualifying employer.
Should I stop submitting employment certification forms?
Definitely not, keep going. Certifying regularly is your best protection, since already-certified months are the hardest for any revived rule to erase.
Why are some people’s payment counts dropping?
The Department says it’s fixing data errors from the previous administration. Advocates say legitimate credit is being stripped away, pushing borrowers into payments they shouldn’t have to make. Keep dated screenshots so you have evidence if you ever need to dispute a change.
Does this affect the Sweet v. McMahon settlement?
No, that’s a completely separate case. The Ninth Circuit rejected the Department’s appeal there on July 17, 2026, protecting relief for more than 170,000 borrowers, including full discharge, refunds, and credit report fixes.
Can PSLF just be shut down entirely?
Not without Congress. The One Big Beautiful Bill Act kept the program alive. What can change without a vote is the surrounding rules and processes.
When will we get a final answer on the appeal?
Briefing likely runs into late 2026, with rulings possible sometime in 2027. A Supreme Court appeal is possible after that. Plan around what the law says today, not around guesses about tomorrow.
Final Word
This appeal doesn’t change your eligibility today, but it does raise your risk level down the road. The rule is dead for now, the employer test hasn’t moved, and the Department has already lost this fight twice at trial level plus once at the Ninth Circuit in the related case. The one thing fully in your control is your paperwork. Always double-check against official sources before you make a big decision.
If you’re rethinking how to pay for school altogether, it’s worth browsing current fully funded scholarship listings for U.S. students as an alternative to taking on debt in the first place.