Two PSLF appeals dismissed; a third remained pending

The Justice Department dismissed two appeals on Oct. 21, 2026, over a federal rule that would have allowed the Education secretary to disqualify some public-service employers from the Public Service Loan Forgiveness program. The dismissals leave in effect the lower-court rulings that vacated the rule in those cases. A separate state-led appeal remained pending as of Oct. 26, so the broader legal dispute was not over.

The distinction is important: the Justice Department’s action ended two appeals, but it was not a new appellate ruling on whether the rule was lawful. Nor did it decide whether any individual borrower qualifies for loan forgiveness.

What the rule would have changed i

The Education Department’s October 2025 final rule would have given the Education secretary authority to disqualify an employer from PSLF after determining that the employer had a “substantial illegal purpose.” It addressed employers’ eligibility under the program, rather than creating a new test for individual borrowers.

Government and nonprofit organizations whose employees seek PSLF were among the employers potentially affected. The rule was scheduled to take effect July 1, 2026, but lower-court rulings vacated it before that date. The two appeals dismissed on Oct. 21 challenged those rulings. With those appeals dismissed, the rulings remain in place in those cases; the dismissals themselves did not reinstate the rule.

The challengers argued that the Education Department had exceeded its authority and that the rule raised First Amendment concerns. Those were arguments in the litigation, not findings made by the Justice Department’s decision to dismiss the appeals.

What borrowers should understand i

PSLF generally requires 120 qualifying monthly payments while a borrower meets the program’s qualifying-employment and other requirements. The appeal dismissals did not change those statutory terms or automatically forgive anyone’s loans. A borrower’s eligibility still depends on the program’s requirements for that borrower.

For employers and their workers, the immediate effect is narrower: the rule’s employer-disqualification framework remains vacated under the two lower-court rulings whose appeals were dismissed. That is different from a decision granting every public-service employer permanent eligibility, or a ruling resolving every challenge to the rule.

As of Oct. 26, reporting identified one separate state-led appeal as still pending. In the three reported appeals, two had been dismissed and one remained unresolved. That remaining case meant litigation over the rule continued, even though the two dismissals left the challenged lower-court rulings in effect.