The federal government has withdrawn its current plans to exclude certain nonprofits from the Public Service Loan Forgiveness (PSLF) program. 

On Wednesday, the federal government agreed to dismiss its appeal in a federal court case filed by the National Council of Nonprofits and a broad coalition of more than a dozen cities, labor unions, and nonprofits. The case challenged the U.S. Department of Education’s 2025 final rule regarding PSLF, a rule that would have unlawfully limited which charitable nonprofits qualify as eligible employers under PSLF based on their mission or the communities they serve. 

Several nonprofits use PSLF as a hiring, recruitment and retention tool, and this rule would have jeopardized that program. 

Because the government dropped its appeal, a federal court decision issued in June stands, preventing the administration from misusing the PSLF program to target nonprofits it disfavors. 

This is a major win for nonprofits – and their employees – who can continue to use the PSLF program. Thanks to any members who shared their stories with NCN to bolster their case against the administration.  

DANA will keep members updated on any changes to this situation.