Major Update For 1.9 Million Borrowers About Student Loan Forgiveness And Repayment Processing

Forbes

28-04-2025

WASHINGTON, DC - MARCH 29: U.S. President Donald Trump greets Small Business Administration head ... More Linda McMahon during an event celebrating Women's History Month, in the East Room at the White House March 29, 2017 in Washington, DC. (Photo by)
Nearly two million student loan borrowers remain stuck in repayment limbo, even as the U.S. Department of Education signals a new plan to address the massive backlog of Income-Driven Repayment applications. A recent court filing provided a significant update on how the Department will finally tackle this logjam and offers a timeline for status and data updates. For the 1.9 million borrowers waiting for their application to be processed, every month of delay is a month they cannot get an affordable payment plan or credit toward loan forgiveness, leaving them financially and emotionally in limbo.
In an April 25 court filing, which is part of an ongoing lawsuit by the American Federation of Teachers, the Education Department agreed to a series of status reports to publicly track its progress on processing backlogged IDR applications​ (the agreement is still subject to adoption by the court, but given that both sides were in agreement about the path forward, one would be inclined to believe it will be adopted). The first report is due May 15, 2025; subsequent updates will follow every 30 days. At least three monthly reports will be filed (up to six, absent further court order) to ensure transparency​ about how quickly servicers tackle the application backlog and hold the Department accountable as it works through it.
Each status report will include detailed data on the IDR processing backlog​, including:
The data the Education Department will provide will be instrumental in calculating the efficiency and throughput of loan servicers, at least directionally, in processing backlogged applications. This should give student loan borrowers visibility on the estimated time it could take for their specific application to be processed and quell the massive uncertainty over the processing timeline.
Another significant update is that the first status report in May will include a list of which types of past loan forbearances are eligible for PSLF buyback credit​. The Education Department has indicated that loan servicers will soon resume processing IDR applications that are on hold. In a sworn court declaration, an Acting Under Secretary of Education revealed that servicers had been directed to place borrowers into specific IDR plans as soon as possible, with an expected start date of May 10, 2025. This means that after a pause of over two months, borrowers' IDR requests should finally begin to be processed again in May, a critical first step in chipping away at the enormous IDR application backlog.
The IDR application backlog has real consequences for those seeking relief. Until processing resumes, affected borrowers cannot access the lower payments that IDR plans offer or make progress toward loan forgiveness. In effect, the logjam has created a severe student loan forgiveness delay for anyone relying on IDR or PSLF programs to cancel their debt after years of payments. Borrowers who reached the finish line for forgiveness have seen their discharges put on hold, and those working toward Public Service Loan Forgiveness have watched the clock stop on counting qualifying payments.
"Every day these applications go unprocessed deprives borrowers of critical time toward IDR and PSLF relief and financial stability,' Persis Yu, deputy executive director and managing counsel at the Student Borrower Protection Center,​ told me in an interview. In other words, each month of delay is one less month that counts toward the 120 payments required for PSLF or the 20- or 25-year clock for IDR loan forgiveness. These delays can cost borrowers thousands of dollars and extend their indebtedness by months or years. As interest accrues and anxiety builds, borrowers are left in an untenable position, stuck making higher payments than they should or in forbearance with no clear end in sight.
Borrowers and advocates should now mark their calendars for May 15 when the Department of Education will release the first IDR status report covering the month of April. This report and subsequent ones will highlight the IDR processing effort, showing whether the backlog of pending applications is finally shrinking​ and by how much. The IDR status report timeline will be one progress report on restoring the student loan system to standard functionality. Borrowers should pay close attention to these updates and see how many IDR applications are getting processed each month, as this will indicate how quickly relief is coming.
There are other encouraging signs on the horizon as well. The Education Department has hinted at new measures to streamline IDR enrollment. This week, officials announced in a press release plans to "launch an enhanced Income-Driven Repayment process, simplifying the time it takes to enroll in IDR plans and eliminating the need for borrowers to recertify their income every year," potentially by leveraging IRS data-sharing​.
If this enhancement works as described, it could significantly ease the forward IDR application process. Such improvements could also prevent a future IDR application backlog of this magnitude from ever building up again by making it faster and easier to process IDR requests.
Finally, borrowers should remember that the legal and oversight pressure remains. The AFT, the organization that took the Education Department to court, along with the SBPC, have indicated they will monitor the Department's progress closely and work on an information-sharing agreement to ensure the agency stays on track and continues to make progress against the application backlog​. Further legal action could resume if the backlog isn't reduced as promised or if Department of Education student loan updates show insufficient improvement. Conversely, if the Department meets its commitments, borrowers could soon see their IDR plans approved and counts toward forgiveness updated, which would be welcome news to many.