New Update On Student Loan Repayment Backlog And PSLF Buyback Raises Alarms
Secretary of Education Linda McMahon submitted a new court filing on Wednesday providing updates on the status of a massive backlog associated with pending income-driven repayment plan requests and student loan forgiveness applications for the PSLF Buyback program. The latest filing suggests that the Department of Education continues to make painfully slow progress in working through the application backlogs. And in light of new developments associated with recent legislative and policy changes, the backlogs may actually soon get worse.
The latest filing by the Trump administration is part of an ongoing lawsuit filed by the American Federation of Teachers over stalled applications for income-driven repayment plans and PSLF Buyback. The Trump administration had halted IDR application processing earlier this spring, arguing that a pause was required to update its systems to comply with a new court order associated with a separate ongoing legal challenge over the SAVE plan. The AFT argued in its lawsuit that the IDR shutdown was unlawful, and was also preventing borrowers from pursuing Public Service Loan Forgiveness, a separate program that can provide student loan forgiveness to teachers, nurses, firefighters, and other public servants after 10 years of qualifying payments.
After the AFT filed its suit, the Department of Education resumed processing IDR requests. But the temporary shutdown exacerbated an existing backlog of applications. In the meantime, many borrowers pursuing PSLF who were stuck in the SAVE plan forbearance and were nearing the threshold for student loan forgiveness applied for PSLF Buyback because they were unable to quickly change their repayment plan. PSLF Buyback is a relatively new program that allows borrowers to make a lump sum payment so that prior periods of non-qualifying deferments or forbearance can count toward student loan forgiveness. But the surge in PSLF Buyback requests also caused a massive backlog, which was likely worsened by mass staff layoffs the Trump administraiton implemented at the Department of Education.
In April, the AFT and the department reached a temporary agreement whereby Trump administration officials would provide monthly updates on the application backlog associated with IDR requests and PSLF Buyback. In the meantime, the litigation would be temporarily paused to assess this progress. Secretary McMahon filed the department's third such update on Wednesday. But the newest update shows that the department is still struggling to process applications for repayment plans and student loan forgiveness, just as the department is pushing millions of additional borrowers to switch plans in the face of new policy and legislative developments. Here's the latest.
Trump Administration Struggles To Process Surge Of Student Loan Repayment Requests
The Department of Education latest status report on IDR application processing shows that administration officials and student loan servicers have made only a little dent in the backlog.
While the IDR application backlog has been reduced from nearly two million requests through April 30, the total current backlog is largely unchanged from the previous month. At the end of May, the department had processed 285,694 IDR applications, with 1,582,641 applications remaining in the queue. As of Wednesday's update – which reflects processing figures through June 30 – the department has only processed an additional 186,731 applications, suggesting a significantly slower rate of processing in June as compared to May. And, concerningly, the total number of IDR applications in the backlog stood at 1,511,504 – largely unchanged from the prior filing. If processing continues at the current rate (a net backlog reduction of roughly 70,000 applications), it would take nearly two years for the department to clear the backlog.
The Department maintains that it is making progress in working through the IDR application backlog, and blames the Biden administration for the large number of student loan repayment plan requests that remain in the queue.
'The Department continues to make progress on the backlog of submitted IDR applications because of a processing pause put in place by the Biden Administration,' said the department in a statement last week. 'Borrowers switching from the SAVE Plan to another IDR plan can expect quick and timely processing.'
Backlog Of Student Loan Forgiveness Requests For PSLF Buyback Grows Again
The latest filing also presented equally concerning updates about the PSLF Buyback backlog, which continues to move in the wrong direction.
In the department's initial filing in May, the backlog of student loan forgiveness requests under PSLF Buyback stood at more than 49,000. The backlog then grew to more than 58,000 the following month, despite the department having processed several thousand PSLF Buyback requests. Wednesday's filing indicates that the department has now processed another 2,224 PSLF Buyback applications, reflecting additional progress. But The PSLF Buyback application backlog has grown yet again from more than 58,000 at the end of May to 65,448 as of June 30. This means the backlog has grown by roughly a third over the course of the last three months, despite steady processing by the department.
Application Backlogs For Student Loan Forgiveness And Repayment May Soon Worsen
This bad news for student loan borrowers may only get worse due to new policy and legal developments. Last week, the Trump administration abruptly announced that starting on August 1, the Department of Education will begin charging interest on federal student loans that are subject to the SAVE plan forbearance. Borrowers enrolled in SAVE have had no payments and no interest accrual since last year due to the ongoing legal challenge over the future of the program. The administration argued that the resumption of interest charges is necessary to comply with a new court order in that lawsuit. But student loan borrower advocacy groups noted that nothing in that latest order requires the department to start charging interest again on covered student loans.
As a result of the administration's decision to resume charging interest on student loans subject to the SAVE plan, the department is now actively encouraging more than 7.7 million borrowers to apply to switch to a different income-driven repayment plan. The department also noted that the future of the PAYE and ICR plans is also in doubt, particularly after President Trump's so-called 'Big, Beautiful Bill' authorized the eventual repeal of PAYE and ICR, as well as the SAVE plan. The department suggested that these borrowers also consider applying to change their repayment plan. The Income-Based Repayment plan, or IBR, would be the only alternative option. This could potentially add millions of additional applications to the existing backlog in the coming weeks and months.
'The Department urges all borrowers in the SAVE Plan to quickly transition to a legally compliant repayment plan – such as the Income-Based Repayment Plan,' said Secretary McMahon in a statement last week announcing the resumption of interest accrual. "Borrowers in SAVE cannot access important loan benefits and cannot make progress toward loan discharge programs authorized by Congress.'
What Student Loan Borrowers Can Do
Some student loan servicers have urged borrowers who applied for an IDR plan in April of this year or earlier to resubmit their application online using the newly restored IRS data retrieval tool, which can expedite application processing by automatically verifying a borrower's income. The Department of Education appears to encourage using this feature, as well.
'Applying for an IDR Plan is quick and easy if borrowers provide consent for the Department to obtain their federal tax information directly from the Internal Revenue Service,' said the department. 'This allows the Department to process borrowers' IDR applications faster and eliminates the need for borrowers to manually upload their income information.' The department noted that student loan borrowers who provide this consent would also be eligible for automatic annual income recertification for existing IDR plans.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
19 minutes ago
- Yahoo
Trump sidesteps Senate and judiciary with some U.S. attorney picks
Federal judges in several states have rejected President Trump's controversial picks for top prosecutor posts in a rare standoff between the courts and the White House, but those acting U.S. attorneys will nonetheless remain in place because of actions taken by the president and the Justice Department. Last month in New York and New Jersey, panels of federal district judges declined to appoint two of Mr. Trump's interim choices to serve as U.S. attorneys – John Sarcone III of New York and Alina Habba of New Jersey. By law, if the Senate fails to confirm a nominee for a judicial post within 120 days, the District Court can extend the interim appointee or select someone else to serve in an acting capacity until a presidential nominee is confirmed. In New York, the court declined to extend the interim top prosecutor but also declined to appoint an acting U.S. attorney. In New Jersey, a panel of judges replaced Habba with Desiree Leigh Grace, the first assistant to the U.S. attorney and the next-highest ranking prosecutor in that office. Within hours, however, the Justice Department fired Grace and installed Habba as acting U.S. attorney, extending her term for another 210 days. To keep Sarcone in place, Attorney General Pam Bondi named him "special attorney to the attorney general," effectively giving him the power of a U.S. attorney, and he was named first assistant U.S. attorney, leaving him in charge of the office. The Trump administration employed similar maneuvers in Nevada and California in late July, this time appointing both interim U.S. attorneys in an acting capacity before the judges were to vote. Those two are Bilal "Bill" Essayli in California, and Sigal Chattah in Nevada. Why some of the acting U.S. attorneys have faced resistance The clash with the judiciary has come as some legal experts have expressed concern about actions taken by these Trump appointees or by comments they've made. Essayli, a former assistant U.S. attorney for California, has been accused of politicizing the office by pushing his staff to pursue cases regarded as being aligned with Trump's interests. This has contributed to an exodus from the Los Angeles-based district, Bloomberg Law reported. Essayli is the only one of the four who has prior experience as a prosecutor. Chattah was in private practice and previously ran unsuccessfully for state attorney general in Nevada. Critics have also accused her of using public office to pursue prosecutions of her political opponents and criticized her use of racially charged language in the past. A group of more than 100 former judges sent a letter to the District Court in Nevada, urging the judicial panel to reject the extension of Chattah's appointment on the grounds of inflammatory remarks she had made in the past. In 2022, she said of her opponent state attorney general's race, Aaron Ford, who is Black, that he should be "hanging from a f****** crane." Chattah, an Israeli, said the comment was not racist and is just a common Israeli saying. Ford won the election and is still in office as Nevada's attorney general. Habba was one of Mr. Trump's personal lawyers before his 2024 election and was initially named White House counselor. As interim U.S. attorney, she initiated investigations into New Jersey's Democratic governor and attorney general, on allegations that they were not cooperating with federal immigration authorities. Upon being named interim U.S. attorney, Habba said she'd use the office to help "turn New Jersey red," though U.S. attorneys are supposed to remain politically neutral. She also filed and later dropped a criminal trespassing charge against the Newark mayor, a Democrat, and accused Democratic Rep. Monica McIver of felony assault at an immigration protest. It's not just judges, but also defendants who are challenging Habba's appointment, alleging she holds the office unlawfully. Two individuals being prosecuted by Habba's office have filed motions to dismiss their cases, arguing she illegitimately holds the position. On Friday, Sarcone's office in the Northern District of New York subpoenaed state Attorney General Letitia James as part of its investigation into whether she and her office violated Mr. Trump's civil rights in the fraud lawsuit she brought against him in 2022. He was found liable of civil fraud in February 2024, months before his re-election. Sarcone served in Mr. Trump's first administration as a regional administrator for the General Services Administration. The U.S. Attorney's offices in Northern New York, New Jersey, Nevada and California have not responded to requests for comment. Sidestepping the Senate and the Judiciary Trump's administration isn't the first to exploit the acting official loophole – several administrations have relied on it in the past. In 2014, President Barack Obama appointed Vanita Gupta as acting head of the Justice Department Civil Rights Division amid the department's investigation into the Missouri shooting of unarmed teen Michael Brown by a police officer. As the CATO Institute's Thomas Berry pointed out, Obama never nominated Gupta for the permanent position, but she served well beyond the 210 days allowed by the Vacancies Act. Gupta left office in January 2017, as Mr. Trump was beginning his first term. The scheme has received more attention from legal experts recently in light of the controversial nature of the four attorneys and the administration's overt push to sidestep the Senate and the judiciary. A Justice Department spokesperson said Mr. Trump and Bondi have built a "fantastic team" of prosecutors with full departmental support. The spokesperson declined to comment on why the department chose to use the Vacancies Act to temporarily appoint the individuals, rather than sending them through the traditional Senate confirmation process. The Justice Department's use of the maneuver has raised the ire of several legal experts, who said they were concerned by the administration's moves to sidestep judicial authority. Michael Luttig, a former federal judge who signed onto the letter urging the rejection of Chattah's appointment, told CBS News that Mr. Trump's efforts to install U.S. attorneys without the Senate's approval are a part of a larger assault on the justice system and the rule of law. "Every action that he's taken has been intended to harass, intimidate and threaten the federal judiciary into submission to his will," Luttig said. U.S. attorneys and the Vacancies Act Across the country, 93 U.S. attorneys lead the federal prosecutor's office in their judicial district. Each presidential appointee must be confirmed by the Senate to serve on a permanent basis. Confirmation can be a lengthy process, so, under the Vacancies Act, the president can temporarily appoint an individual to fill Senate-confirmed roles on an interim basis to allow agencies and offices to continue to function. The act enables the president to appoint an interim U.S. attorney to any of those positions for 120 days. If the Senate hasn't confirmed a nominee by the end of that period, judges in the corresponding federal district court may extend the interim appointee or install a candidate they choose as acting U.S. attorney for another 210 days. "My understanding is that under prior administrations, there would be some behind-the-scenes communication to make sure that the interim U.S. attorney picked by the administration was acceptable to the District Court," Berry told CBS News. For three of the four contested nominees, Mr. Trump did not submit a nomination for the post to the Senate within the 120-day interim period. He nominated Habba to be U.S. attorney for New Jersey on June 30 but withdrew her nomination when it became evident that the Senate would not confirm her. In addition to Habba's rejection by the judges, also standing in the way of her ability to stay on in the office was her nomination. Under the Vacancies Act, a person may not serve as an acting officer if the president has submitted that individual's nomination to the Senate. Withdrawing Habba's nomination meant Mr. Trump could fire Grace and appoint Habba to replace her as first assistant, allowing her to assume the acting title. In New York, Sarcone reached the end of his 120-day term without a nomination pending before the Senate. When his term expired, the District Court declined to extend Sarcone, and didn't appoint anyone to the position. The Justice Department says its appointment of Sarcone as "special attorney to the attorney general" would confer him with the authority of a U.S. attorney and is "indefinite." As of Tuesday, six of Mr. Trump's 49 interim U.S. attorneys have served the maximum 120 days allowed under that status. Andrew Boutros of the Northern District of Illinois and Joseph Murphy of the Western District of Tennessee, have also seen their interim appointments expire. In their cases, though, the District Courts voted to extend them on the 120th day, a person familiar with the decisions confirmed to CBS News. It's not clear whether the Trump administration will continue to use the maneuver to appoint other U.S. attorneys. Mr. Trump has named at least 45 interim U.S. attorneys since January and has submitted nominations to the Senate for at least 30 of those picks. In early August, the Senate approved the first two of Mr. Trump's nominees for U.S. attorneys: Jeanine Pirro to serve in the District of Columbia and Jason A. Reding Quiñones for the Southern District of Florida. Democratic Sen. Dick Durbin of Illinois, who serves as the ranking member of the Senate Judiciary Committee, said in a statement to CBS News that the Trump administration is "abusing" the interim appointment authority to install loyalist interim U.S. attorneys without Senate confirmation. President Trump says meeting with Russia's Putin is not to broker peace deal in Ukraine Trump says he's placing D.C. police under federal control, deploying National Guard Could Tropical Storm Erin become the first Atlantic hurricane of 2025? Solve the daily Crossword
Yahoo
19 minutes ago
- Yahoo
Returns On Capital At Tri-Mode System (M) Berhad (KLSE:TRIMODE) Paint A Concerning Picture
There are a few key trends to look for if we want to identify the next multi-bagger. Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. Having said that, from a first glance at Tri-Mode System (M) Berhad (KLSE:TRIMODE) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. Understanding Return On Capital Employed (ROCE) Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. The formula for this calculation on Tri-Mode System (M) Berhad is: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.028 = RM4.4m ÷ (RM173m - RM17m) (Based on the trailing twelve months to March 2025). So, Tri-Mode System (M) Berhad has an ROCE of 2.8%. Ultimately, that's a low return and it under-performs the Logistics industry average of 4.0%. Check out our latest analysis for Tri-Mode System (M) Berhad Historical performance is a great place to start when researching a stock so above you can see the gauge for Tri-Mode System (M) Berhad's ROCE against it's prior returns. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Tri-Mode System (M) Berhad. What The Trend Of ROCE Can Tell Us In terms of Tri-Mode System (M) Berhad's historical ROCE movements, the trend isn't fantastic. Around five years ago the returns on capital were 3.5%, but since then they've fallen to 2.8%. However, given capital employed and revenue have both increased it appears that the business is currently pursuing growth, at the consequence of short term returns. If these investments prove successful, this can bode very well for long term stock performance. Our Take On Tri-Mode System (M) Berhad's ROCE While returns have fallen for Tri-Mode System (M) Berhad in recent times, we're encouraged to see that sales are growing and that the business is reinvesting in its operations. These growth trends haven't led to growth returns though, since the stock has fallen 24% over the last five years. As a result, we'd recommend researching this stock further to uncover what other fundamentals of the business can show us. If you'd like to know more about Tri-Mode System (M) Berhad, we've spotted 5 warning signs, and 4 of them can't be ignored. While Tri-Mode System (M) Berhad may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
19 minutes ago
- Yahoo
Mamdani defends lashing out at Trump, freezing rent proposal
Mamdani was pressed on Tuesday on his claim he will be Trump's 'worst nightmare' as well as his controversial plan to 'freeze' rent in New York City
