Federal workers with student loans are facing a new set of rules, timelines, and tradeoffs. A recent law allows student loan payments to trigger retirement contributions, and a new repayment assistance program is expected to offer an alternative route to loan relief. At the same time, Trump administration PSLF changes could narrow qualifications for federal employee student loan forgiveness. These changes are creating both opportunities and uncertainty for federal workers with loans. Here’s what you need to know.
The Trump Administration’s PSLF Changes
Public Service Loan Forgiveness (PSLF) still offers loan cancellation after 120 qualifying payments while working full-time for a qualifying federal employer. But under a March 2025 executive order, that definition of “qualifying” may change.
The directive instructs federal agencies to review and tighten employer eligibility, specifically calling out nonprofit and quasi-government organizations. While the rules are still being finalized, some Feds working under grants, contracts, or through affiliated nongovernment entities could lose access. If you fall into this category, closely monitor your employer eligibility.
Secure 2.0 and Student Loan Matching Contributions
Effective as of January 2024, Secure 2.0, enacted by the Biden administration, allows agencies and other employers to match your student loan payments with retirement contributions, just like they would if you were contributing to TSP.
This can be especially helpful for early-career Feds who’ve delayed saving for retirement while prioritizing loans, as it allows you to work toward both goals at the same time. However, not all agencies are offering it. Check with your HR office to confirm if the benefit is available to you.
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New Repayment Assistance Plan (RAP) and Alternatives
The One Big Beautiful Bill (OBBB) Act requires a new Repayment Assistance Plan (RAP) to launch no later than July 1, 2026. Payments made under RAP will count toward PSLF, similar to income-driven repayment (IDR) plans.
Feds may take advantage of new and revised IDR plans that offer forgiveness after 20 to 25 years (sometimes sooner for smaller balances). State- and occupation-specific opportunities may also be available, especially for Feds in healthcare and education roles.
Strategy and Timing for Federal Employees
With all of these new options to consider, many Feds are confused about the optimal strategy. Unfortunately, there’s no one-size-fits-all solution. The best programs for you will depend on a variety of factors, including where you are in your federal career.
- Early-career employees maybenefit from Secure 2.0 matching contributions paired with income-driven repayment plans that offer long-term forgiveness.
- Mid-service Fedswho have already made progress toward PSLF should monitor the changes closely, but may still find it to be the most effective option. RAP could also present a better fit, depending on future rule changes.
- Those nearing retirementwill need to weigh loan repayment strategies alongside pension income, TSP withdrawals, and timing of retirement.
As rules continue to shift, future changes could affect employer eligibility, payment timelines, or qualifying plans. This makes proactive, ongoing planning even more important, especially for Feds balancing loan repayment with long-term retirement goals.
Does Your Plan Need a Second Look?
“Student loan forgiveness 2.0” is here. PSLF is still a valuable path, but it’s no longer the only one. Staying informed and revisiting your repayment strategy may help you take advantage of new opportunities and avoid potential missteps as programs continue to evolve. Reach out to the team at Serving Those Who Serve at [email protected] for personalized guidance.
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