California's Safety Net for Legal Aid Lawyers
The California Legislature has created a new safety net to help legal aid lawyers continue serving their communities if changes to Public Service Loan Forgiveness (PSLF) affect the eligibility of their nonprofit employer. Administered by the California Access to Justice Commission (CalATJ), the California PSLF Safety Net will be there if an eligible nonprofit legal services organization loses PSLF eligibility under a new federal regulation. CalATJ can reimburse eligible lawyers for the monthly federal student loan payments that would have been forgiven. The program is designed to deflect the risk, which may have been the purpose of the new regulation, that attorneys will leave or decline to join legal aid organizations that do work that the Secretary of Education disapproves.
A federal court recently blocked the regulation, but that decision may be subject to a stay and will be appealed. If the regulation takes effect, attorneys working at an affected organization could no longer earn credit toward federal student loan forgiveness while continuing to serve vulnerable Californians at that organization. The California PSLF Safety Net was created to help ensure lawyers can continue this important work if that happens.
The Safety Net is available to nonprofit providers of legal help to vulnerable Californians and is not limited to organizations that receive IOLTA funding. There is no need for lawyers or organizations to enroll in advance, and no cost to participating organizations or eligible attorneys. California has appropriated funding for the program through June 2030.
At a Glance: CalATJ LRAP and the California PSLF Safety Net
| CalATJ LRAP | California PSLF Safety Net | |
|---|---|---|
| Purpose | Helps legal aid lawyers repay their student loans while working in public interest law. | Protects legal aid lawyers if their nonprofit loses PSLF eligibility under the new federal regulation, 34 CFR §685.219. |
| When it applies | Available to participating organizations and their eligible attorneys. | It applies if the Secretary of Education denies PSLF eligibility to a California legal aid nonprofit under the federal regulation, and it reimburses payments that would have been forgiven (after 120 qualifying payments). |
| Who funds it | Funded by participating legal services organizations and other contributors. | Fully funded by the State of California. Organizations need not contribute. |
| Organization contribution required? | Yes. Organizations participate by contributing to LRAP. | No. There is no cost to organizations. |
| Who is eligible? | Eligible attorneys at participating LRAP organizations. | Eligible attorneys working at qualifying nonprofit legal services organizations that have lost PSLF eligibility. |
| What does it provide? | Monthly reimbursement of eligible student loan payments while participating in LRAP. | Monthly reimbursement of eligible federal student loan payments that would have been forgiven (after 120 payments that would have qualified before the regulation) while the organization remains ineligible for PSLF. |
| Relationship to PSLF | Designed to help attorneys make their monthly loan payments while they work toward federal PSLF. | Designed to help attorneys when their monthly student loan payments would have been forgiven under the rules before the new regulation. |
| Duration | Continues as long as funding and eligibility requirements are met. | Intended as a temporary safety net lasting long enough for litigation challenges to become final, or until a new Secretary of Education is appointed by a new president. State funding has been appropriated through June 2030. |
| Tax treatment | Reimbursements are structured to be tax advantaged and excluded from recipients' taxable income. | Reimbursements are structured to be tax advantaged and excluded from recipients' taxable income. |
| Cost to attorneys | None. | None. |
PSLF Frequently Asked Questions
What is California's PSLF Safety Net?
The California Legislature, in the 2026 Budget Act, created a new safety net to help legal aid lawyers if the Secretary of Education uses federal regulation, amending 34 C.F.R. § 685.219(b), to declare their nonprofit employer ineligible for Public Service Loan Forgiveness (PSLF). If that happens, the California Access to Justice Commission (CalATJ) can reimburse eligible lawyers who continue working in legal aid for the monthly federal student loan payments that would have been forgiven except for the new regulation.
Why was this safety net created?
The safety net was created because the new regulation creates uncertainty in the minds of current and prospective legal aid lawyers about whether working for a nonprofit that engages in work the Secretary of Education disapproves might block eligibility for PSLF. Although a federal court has blocked the regulation for now, that decision may be subject to a stay, and will be appealed. California created this program so legal aid lawyers can continue serving vulnerable communities without worrying about losing the value of years spent working toward PSLF.
Does this mean PSLF has ended?
No. PSLF still exists. The safety net only applies if a nonprofit legal services organization loses PSLF eligibility under the new federal regulation.
Who is eligible for the safety net?
The safety net is intended for lawyers who:
Work for an eligible California nonprofit that provides free legal services to vulnerable Californians.
Have federal student loans.
Would have been working toward PSLF but can no longer earn qualifying credit because their employer lost eligibility under the new regulation.
What expenses does the safety net cover?
CalATJ can reimburse eligible lawyers for monthly federal student loan payments that would have been forgiven except for the new federal regulation.
Will I receive loan forgiveness through this program?
No. This program does not forgive your federal student loans. Instead, it will reimburse for monthly federal student loan payments that would have been forgiven except for the new regulation. The safety net is intended to bridge the period of uncertainty created by the new regulation so lawyers can continue serving vulnerable Californians while court challenges to the regulation proceed, or until there is a different Secretary of Education under a different President. California has already appropriated funding through June 2030.
Is the safety net available now?
The safety net has been funded by the State of California and is ready if it becomes necessary.
If the federal regulation never takes effect, or if your employer remains PSLF eligible, you will simply continue working toward federal PSLF as usual.
Does my employer have to pay for this program?
No. There is no cost to eligible legal services organizations, and organizations do not need to contribute funding for this safety net.
Does my organization have to participate before I can qualify?
No. Unlike CalATJ's traditional LRAP, this safety net does not require employer participation or contributions.
Is this available to organizations that do not receive IOLTA funding?
Yes. Any nonprofit provider of free legal help to vulnerable Californians including low-income individuals, seniors, veterans, and immigrants may be covered if the nonprofit loses PSLF eligibility under the new federal regulation. Receiving IOLTA funding is not a requirement.
How long is funding available?
The State of California has already appropriated funding for the safety net through June 2030.
Will reimbursements be taxable?
CalATJ has designed the reimbursement method so that the reimbursements are intended to be excluded from recipients' taxable income.
What if the federal court permanently blocks the regulation?
If the regulation never takes effect, attorneys should simply continue earning credit toward PSLF under the existing federal program. The safety net is there only if it becomes necessary.
I'm a law student. Why does this matter to me?
Many law students are able to choose a legal aid career only because PSLF helps make public service financially possible.
California created this safety net to help ensure that uncertainty about the federal regulation does not discourage future legal aid attorneys from entering public service.
I'm already enrolled in CalATJ's LRAP. Does this affect me?
The PSLF Safety Net is separate from CalATJ's existing Loan Repayment Assistance Program (LRAP).
Some attorneys may qualify for LRAP, the PSLF Safety Net, or both, depending on their circumstances. Additional guidance will be provided if the safety net becomes necessary.
I don't currently work for a legal aid organization. Can I still qualify?
The safety net is intended for lawyers working at eligible nonprofit legal services organizations that would lose PSLF eligibility under the federal regulation.
Where can I learn more?
Questions can be sent to LRAP@CalATJ.org or by leaving a voicemail at (510) 629-1264.