Fired federal workers risk losing the student-loan forgiveness they signed up for

• The Trump administration sent reduction-in-force notices to over 4,000 federal employees.
• Impacted federal workers could lose Public Service Loan Forgiveness eligibility.
• Terminated federal workers who want to continue their PSLF progress would have to find a new qualifying employer.

The latest round of federal worker firings could leave laid-off public servants with student loans high and dry.

Over the past week, the Trump administration implemented another force reduction across federal agencies, impacting over 4,100 federal workers, as the government shutdown continues.

Fired federal workers could lose progress toward Public Service Loan Forgiveness, which forgives student debt for government and nonprofit workers after 10 years of qualifying payments.

For payments to count toward PSLF, a borrower must be working for a qualifying employer, like the federal government, when the payments are made. That means that a federal worker impacted by the RIF will not receive credit toward PSLF unless they get hired at a different employer that would qualify for the program. Once they get a new qualifying employer, they will be able to pick up where they left off with their PSLF payments.

Carolyn Fast, director of higher education policy at the left-leaning think tank The Century Foundation, told Business Insider that she recommends borrowers affected by the federal cuts document their PSLF payment count now and make sure they have copies of it to avoid any issues down the road when they have to verify their payments to receive relief.

She also said that borrowers who are at the 120 payment mark should apply for forgiveness as soon as they can.

“The regulation talks about how you need to be at the eligible employment when you apply for the forgiveness after you make the amount of payments,” Fast said. “So it’d be important to do that while you’re still a federal worker.”

The PSLF buyback process could also be beneficial for some federal workers, Fast said. Buybacks allow borrowers to “buy back” months spent in deferment or forbearance periods by making payments equal to what they would have owed at the time, if those payments would enable them to reach the 120 payment threshold.

Federal workers with over 10 years of public service but who have not yet received forgiveness should consider whether they might qualify for a buyback, Fast said.

Employees who received a RIF notice were placed on administrative leave beginning October 10, according to the notices reviewed by Business Insider, and the terminations will become effective in early December.

The student-loan repayment system is undergoing major changes. The Department of Education held negotiations in July on President Donald Trump’s executive order to limit PSLF eligibility, which the department said could end up delaying or blocking relief for some borrowers.

At the same time, the department is working to implement a repayment overhaul that Trump signed into law as part of his “big beautiful” spending legislation passed in July. The changes include eliminating existing income-driven repayment plans and replacing them with two options: a standard repayment plan and a new Repayment Assistance Plan. The department also proposed new caps on graduate and professional borrowing.