A PSLF Safety Net for California Legal Aid Lawyers
Legal aid lawyers with federal student loans should be able to count on Public Service Loan Forgiveness (PSLF) after they make ten years of loan payments. However, the Secretary of Education will use a new federal regulation to strip eligibility from nonprofits selected due to their advocacy work on behalf of vulnerable communities If your organization is selected, attorneys who have been working toward PSLF would lose further credit toward their 10-year loan forgiveness as long as they work at that nonprofit.
The U.S. District Court for Massachusetts declared the new regulation invalid on June 30, but that ruling is subject to motions to stay, and the Education Department will appeal. As to the risk those uncertainties pose, California legal aid lawyers have a safety net.
California’s 2026 State Budget created the PSLF Safety Net by funding the California Access to Justice Commission (CalATJ) to step in and help. If a nonprofit that provides free legal help to vulnerable Californians is no longer a PSLF-eligible employer under the new regulation, CalATJ we will reimburse monthly federal student loan payments made by lawyers who would otherwise have qualified for forgiveness of their federal student loans. Our method of providing reimbursements is designed so the reimbursements will be excluded from the recipients’ taxable income. This new PSLF Safety Net does not require legal services organizations to contribute. It is not limited to nonprofits that receive IOLTA money, if they provide free legal help to low-income Californians, seniors, veterans, or immigrants. CalATJ charges nothing to LSOs or to recipients for this safety net. The State has already appropriated funding through June 2030.
The bottom line: This new Safety Net is for lawyers who depend on getting PSLF after ten years of public service and are deciding whether to keep working in nonprofits that do free legal work for vulnerable Californians. It is also for LSOs deciding whether to change the services they offer to avoid losing PSLF eligibility. And it’s for law students and new lawyers deciding whether to pursue a legal aid career. As you make these decisions, remember that this safety net is here to help.
CalATJ also offers a tax advantaged Loan Repayment Assistance Program (LRAP) for nonprofits providing legal help to vulnerable Californians. You can read more about that program here: CalATJ's Loan Repayment Assistance Program.
For more information, please email LRAP@CalATJ.org or leave a voicemail at (510) 255-0577.
Thank you, California Access to Justice Commission