PSLF for government and hospital workers: the 2026 rules

If you work at a VA medical center, a county hospital, a state psychiatric facility, a public health department or a nonprofit hospital, and you carry federal student loans, Public Service Loan Forgiveness is probably the most valuable benefit your employer never mentions. After 120 qualifying monthly payments made while working full time for a qualifying employer, the Education Department forgives the remaining principal and interest.

Two things changed in 2026, and they have been reported together so often that many borrowers are confused about both. A rule that would have let the Department disqualify some employers was struck down by a federal court the day before it took effect. Separately, new repayment plan rules did take effect on July 1, 2026, and those can quietly stop your payment count if you pick the wrong plan. This guide takes each in turn, then gives you a checklist.

What has not changed: the core PSLF requirements

The basic bargain is set by the Higher Education Act and spelled out in the Department’s regulation at 34 CFR 685.219. None of these requirements moved in 2026.

• Your loans must be Direct Loans: Direct Subsidized, Direct Unsubsidized, Direct PLUS or Direct Consolidation. Older FFEL and Perkins loans count only after you consolidate them into a Direct Consolidation Loan.
• You need the equivalent of 120 qualifying monthly payments made after October 1, 2007.
• Each payment must be made while you are employed full time by a qualifying employer. A month counts if you were employed full time by a qualifying employer at any point during that month.
• The payments and the employment do not have to be consecutive, and they do not have to be with the same employer. The PSLF form says so in as many words.
• You must be working full time for a qualifying employer when you make the last required payment and again when you apply for forgiveness.
• You must be repaying under a qualifying repayment plan. This is the part that changed in 2026, covered below.

Forgiveness covers the principal and accrued interest left on the loans once you have met the requirements. The regulation also allows the Department to forgive a loan without an application when it already holds enough information to show you qualify, but you should not plan around that. Certify your employment as you go.

Does your hospital or health department count as a qualifying employer?

The regulation defines a qualifying employer by what the organization is, not by what kind of work you do there. For health care workers, the categories that matter are these.

• Government at any level. A United States-based federal, state, local or Tribal government organization, agency or entity qualifies, and the regulation names the U.S. Armed Forces and the National Guard. That covers VA medical centers, Indian Health Service facilities, military treatment facilities, state hospitals, county and city hospitals, and public health departments.
• Nonprofit hospitals and clinics that are 501(c)(3) organizations exempt from federal income tax. Most nonprofit health systems fall here.
• Certain other nonprofits that are not 501(c)(3) organizations but provide a listed public service. Public health is on the list, and the regulation defines it by occupation: physicians, nurse practitioners, nurses in a clinical setting, health care practitioners, health care support, counselors and social workers, among others. The employer must attest to this on the form, and it cannot be a for-profit business, a labor union or a partisan political organization.
• For-profit hospitals and clinics do not qualify, whatever share of their patients are on Medicaid or Medicare, and whatever public contracts they hold.

The quickest check is the PSLF Help Tool at StudentAid.gov/pslf, which searches the Department’s PSLF Employer Database by your employer’s federal employer identification number. The PSLF form tells you where to find that number: box b of your W-2. It also warns that a number found through an internet search, or taken from a 1099, may not be the one your employer uses for payroll and may not be in the database.

Agency, contract and travel work: who is your employer?

The regulation recognizes three ways to count as someone’s employee. The first is the ordinary one: the organization issues your W-2. The second covers a payroll company. If a qualifying employer contracts with another organization to run its payroll and that organization issues your W-2 under the contract, you are treated as the qualifying employer’s employee. The PSLF form tells people in that position to get the qualifying employer’s own identification number directly, because the number on your W-2 may belong to the payroll company.

The third exception is narrow and matters mostly to physicians and a few other contracted clinicians. If you work as a contracted employee for a qualifying employer, in a position or providing services that applicable state law says cannot be filled or provided by a direct employee of that employer, the regulation counts you as its employee. Whether that applies depends on your state’s law and your role. If you think it does, the PSLF form has a specific certification for it, and the employer must sign.

Outside those exceptions, do not assume a travel, per diem or agency contract counts just because the hospital is public or nonprofit. If your W-2 comes from a staffing company, submit the form for that company and let the Department answer. Finding out after five years that none of the months counted is the expensive way to learn.

What counts as full time on 12-hour shifts, per diem or two jobs?

Full time means working in qualifying employment for a minimum average of 30 hours a week during the period being certified. The regulation says "in one or more jobs", so two part-time qualifying jobs can be added together. A job at a for-profit employer adds nothing to the total.

• Three 12-hour shifts a week is 36 hours and clears the 30-hour average on its own.
• Two 12-hour shifts a week is 24 hours, which falls short. Add a regular six-hour or longer weekly shift at another qualifying employer and the combined average reaches 30.
• Per diem work counts if the average over the certified period reaches 30 hours across your qualifying jobs. A slow quarter can pull the average under 30, so keep your own record of hours worked.
• On the form, your employer certifies whether you were full time or part time for the dates you give. If you are combining jobs, submit a form for each employer.

These examples are illustrations of how the 30-hour average works, not a ruling on your case. The Department decides from the certified forms.

The 2026 employer rule: struck down, and now under appeal

On October 31, 2025, the Education Department published a final rule, effective July 1, 2026, that added a new exclusion to the definition of a qualifying employer. An organization would stop qualifying if the Secretary determined, by a preponderance of the evidence, that it had engaged in activities with a "substantial illegal purpose" on or after July 1, 2026.

The rule listed those activities. They included aiding or abetting violations of federal immigration law, supporting terrorism, and engaging in a pattern of illegal discrimination or of violating certain state laws. The item most relevant to hospitals covered providing puberty blockers, hormones or surgery to minors for gender transition in violation of federal or state law; the rule itself used the term "chemical and surgical castration or mutilation of children". An employer found to have crossed the line would lose eligibility for 10 years, unless the Department approved a corrective action plan sooner. Borrowers would keep credit for months worked before the determination.

The rule never took effect. On June 30, 2026, Judge Myong J. Joun of the U.S. District Court for the District of Massachusetts decided two consolidated challenges, National Council of Nonprofits v. McMahon and Commonwealth of Massachusetts v. U.S. Department of Education. The challengers were 22 states, the District of Columbia, five cities and counties, five nonprofit employers and five employee associations. The court’s conclusion reads: "the Final Rule is contrary to law and promulgated in excess of statutory authority, is arbitrary and capricious, and violates the First Amendment. I therefore hold it unlawful and set it aside. The Final Rule is VACATED." The same day, Judge Amir H. Ali of the U.S. District Court for the District of Columbia separately vacated the rule in Robert F. Kennedy Center for Justice and Human Rights v. McMahon.

The Department has not given up. On August 27, 2026, the Department filed notices of appeal in both cases, to the First Circuit and the D.C. Circuit; neither had been decided as of September 2026, and the rule would stay off unless both rulings were reversed. In a July 13, 2026, Federal Register notice seeking comment on the PSLF form, the Department said it was removing the new attestation "in order to comply with the court order."

The change that did take effect: repayment plans

The budget law signed on July 4, 2025, Public Law 119-21, rewrote federal student loan repayment. The Department first called it the One Big Beautiful Bill Act and now calls it the Working Families Tax Cuts Act. Its final regulations were published on May 1, 2026, and took effect on July 1, 2026. Three parts of it matter for PSLF.

First, a new income-driven plan, the Repayment Assistance Plan, or RAP, counts for PSLF. Federal Student Aid told schools in July 2025 that the law made RAP payments eligible from the moment the plan launched. According to the Department’s June 2026 fact sheet, RAP payments run from 1 to 10 percent of income depending on earnings, fall by $50 a month for each dependent, waive unpaid monthly interest when you pay on time, and add a Department matching payment of up to $50 when an on-time payment would not otherwise reduce principal by at least that much. The minimum payment is $10 a month.

Second, a new Tiered Standard plan does not count. The Department said so directly in the final rule: "Tiered standard is not among these qualifying repayment plans. Accordingly, we are unable to count a monthly payment under Tiered Standard plan as a qualifying monthly payment for PSLF purposes." It also declined a request to warn borrowers enrolled in Tiered Standard that their payments do not count.

Third, the older income-contingent plans are being wound down. The regulation counts payments under those plans only if they are received on or before June 30, 2028, and the Department said borrowers in them keep their PSLF eligibility if they move to RAP on or before July 1, 2028. Borrowers who take out no new loans also keep access to Income-Based Repayment, which remains a qualifying income-driven plan. The 10-year standard plan still qualifies too.

Four situations where the new plans can stop your count

Most PSLF borrowers will not be affected if they stay in a qualifying plan and keep certifying. The risk is in transitions, when a default or an unexamined choice puts you somewhere that does not count.

• Leaving SAVE. The Department announced on March 27, 2026, that the roughly 7.5 million borrowers in the SAVE plan must move to another plan. Starting July 1, 2026, servicers send notices giving a 90-day window; the 90 days run from the date on your notice, and borrowers who do not choose are placed in the Standard plan or the Tiered Standard plan. If you are pursuing PSLF, pick RAP or Income-Based Repayment yourself rather than waiting for the default.
• Consolidating on or after July 1, 2026. A Direct Consolidation Loan made on or after that date can be repaid only under Tiered Standard or RAP. If you consolidate FFEL or Perkins loans to make them eligible, choose RAP. Qualifying payments you already made on Direct Loans carry over as a weighted average; payments made on FFEL or Perkins loans before you consolidate do not count toward PSLF.
• Borrowing again. Congress limited loans made on or after July 1, 2026, to Tiered Standard or RAP. A nurse going back for a nurse practitioner or anesthesia program with new federal loans should expect to repay them under RAP to keep counting.
• Parent PLUS loans. Parents who took out Parent PLUS loans and borrow a new Direct Loan on or after July 1, 2026, can repay all of their Parent PLUS loans only under Tiered Standard, which does not qualify. Parent PLUS loans consolidated before July 1, 2026, with at least one income-driven payment made by July 1, 2028, move to Income-Based Repayment and keep PSLF eligibility, according to the final rule.

If you had months in deferment or forbearance while working full time for a qualifying employer, the regulation lets you buy those months back in some cases. You pay what you would have owed on a qualifying plan at the time, or show that you would have qualified for a $0 income-driven payment. Buyback is not available for periods spent in RAP, and some deferments already count without it, including cancer treatment, economic hardship and military service deferments.

A PSLF checklist for hospital and public health staff

• Confirm every loan is a Direct Loan. If any are FFEL or Perkins, plan a consolidation and choose RAP when you do.
• Look up each employer in the PSLF Help Tool using the number in box b of your W-2.
• Submit a PSLF form now for every qualifying employer you have worked for, including past ones. The form asks you to certify annually or whenever you change employers.
• Check your repayment plan by name. RAP, Income-Based Repayment and the 10-year standard plan count. Tiered Standard does not.
• If you were in SAVE, make your own plan choice within your servicer’s 90-day window.
• Keep copies of every certified form, W-2 and plan-change confirmation. If the Department denies forgiveness, you have 90 days from the denial notice to ask for reconsideration, and your records are your evidence.
• Before you change jobs, check the new employer the same way. A move from a public hospital to a for-profit one stops the count until you return to a qualifying employer.

Questions hospital workers ask about PSLF

Does a VA, IHS or military hospital job count?

Yes. Federal agencies are government organizations, and the regulation names the U.S. Armed Forces and the National Guard. Tribal government employers qualify as well.

Do I lose my count if I leave public service for a while?

No. Qualifying payments already credited stay credited, and nothing has to be consecutive. Months spent at a for-profit employer simply do not add to the count. You do need to be back at a qualifying employer, full time, when you make the final payment and when you apply.

Could my nonprofit hospital lose eligibility because of the 2026 rule?

Not while the court rulings stand. The rule was set aside before it took effect, the Department has removed the new attestation from the form, and neither appeal had been decided as of September 2026. Watch for news from the First Circuit and the D.C. Circuit, but do not change your plans because of it.

Is RAP always the right plan for PSLF?

RAP qualifies, and it is the only income-driven option for new loans and new consolidations. Borrowers with older loans and no new borrowing can also use Income-Based Repayment. Because only 120 payments are needed, the lower qualifying payment is usually the one people aim for. Your servicer can show you what each plan would cost at your current income.

Last reviewed Sep 13, 2026. First published Oct 23, 2026. Federal hiring rules change — confirm anything you act on against the agency's own announcement or OPM guidance.