Big Update On Student Loan Repayment Plan Processing And PSLF Shows Uneven Progress
UNITED STATES - JUNE 3: Secretary of Education Linda McMahon arrives to testify at the Senate ... More Appropriations Labor, Health and Human Services, Education, and Related Agencies Subcommittee hearing on Tuesday, June 3, 2025. The Department of Education filed a status update on application processing for IDR plans and PSLF Buyback this week. (Bill Clark/CQ-Roll Call, Inc via Getty Images)
The Department of Education filed a new update on Tuesday detailing its progress on working through a massive backlog of student loan repayment applications for income-driven repayment plans, as well as requests for PSLF Buyback. The filing shows the department has made a modest dent in IDR applications, although questions and concerns (and tens of thousands of unprocessed applications) remain. Meanwhile, the department appears to have not made much progress reducing the backlog of pending PSLF Buyback applications – in fact, the backlog has grown.
The latest filing on behalf of Secretary of Education Linda McMahon is required under an interim agreement between the department and the American Federation of Teachers, which sued the Trump administration in March over the department's suspension of all IDR application processing the prior month. The suspension caused chaos throughout the federal student loan repayment system, preventing borrowers from enrolling in any income-driven plan and blocking some borrowers from being able to pursue Public Service Loan Forgiveness, a popular student loan forgiveness program for nonprofit and government workers. The department had argued that the move was necessary after a federal appeals court issued a sweeping new order blocking the SAVE plan, one of several income-driven repayment options, in a separate legal challenge over the future of that program.
After the department resumed IDR application processing in April for the ICR, IBR, and PAYE plans, administration officials and the AFT agreed to temporarily pause the litigation to assess processing progress through monthly status reports. Here's where things stand with IDR and PSLF Buyback processing for student loan borrowers after the most recent status report filing.
The Department of Education's first status report was filed in May, and confirmed what many student loan borrowers had suspected – that the administration had made minimal progress in processing hundreds of thousands of pending IDR applications. Through April 30, the department had processed only 79,349 applications, with nearly two million remaining outstanding. But observers noted that processing had only recently resumed at that point, and hadn't fully ramped up yet.
In its latest status report filed on Tuesday, the department showed modest progress. Through May 30, the department has processed 285,694 IDR applications, while 1,582,641 applications remain outstanding. The processing rate for IDR requests appears to have accelerated somewhat since April – which makes sense, given that the department indicated in earlier court filings that the IDR application processing system would not be fully operational again until May 10. But clearly, the department has a long way to go.
In addition, questions remain about the details underlying these numbers. Some federal student loan borrowers have been reporting issues with their online IDR applications (for instance, some borrowers who qualify for the PAYE plan have been unable to select that plan in the online application). It is unclear to what extent these issues are reflected in the department's numbers.
One major student loan servicer added additional complications to the landscape when it posted an announcement earlier this month suggesting that many borrowers may need to reapply for IDR if they submitted an application before April 27. The processing figures posted in the Department of Education's latest filing only reflect the number of IDR applications 'approved or denied.' The department did not provide a more detailed breakdown. Borrowers whose IDR applications are denied by their loan servicer would have to reapply, adding to the application queue yet again.
While IDR application processing appears to be slowly ramping up, the Department of Education posted less rosy figures for the PSLF Buyback program. PSLF Buyback is a relatively new option that allows borrowers pursuing Public Service Loan Forgiveness to submit a formal request to make a lump sum payment covering certain periods of forbearance so that they can count toward student loan forgiveness under the program. PSLF provides borrowers with loan forgiveness on qualifying Direct federal student loans after the equivalent of 10 years of qualifying payments; but only repayment periods under eligible repayment plans can count – most periods of deferment and forbearance do not. Many borrowers stuck in the SAVE plan forbearance, which doesn't count toward student loan forgiveness, who are in their final year of PSLF have submitted PSLF Buyback requests. But few have received a response.
On Tuesday, the Department of Education's latest status report continues to show concerningly slow progress in working through the PSLF Buyback application backlog. In its prior status report covering the month of April, the department had indicated that only 1,472 PSLF Buyback applications had been processed, with more than 49,000 applications in a backlog. In the latest report, the department said that 3,312 PSLF Buyback applications were processed during the month of May. That's a modest jump from the prior month. But the department also revealed that the PSLF Buyback application backlog has actually grown to 58,761. The department's slow processing rate of PSLF Buyback applications appears to not be keeping pace with the ongoing influx of requests submitted by borrowers.
The department has provided no explanation for the slow progress in getting through PSLF Buyback applications, although it could be related to substantial staff reductions at the Department of Education ordered by the Trump administration earlier this year. That 'reduction in force' is the subject of a major legal challenge, which has now reached the U.S. Supreme Court.
The Department of Education's latest update comes as uncertainty continues to grip the federal student loan repayment system. Earlier this week, Senate Republicans unveiled their higher education component of the proposed 'one big, beautiful' reconciliation bill to enact President Donald Trump's legislative agenda. It largely retains most elements of the bill that the House successfully approved last month, and would repeal most existing IDR plans for current borrowers including ICR, PAYE, and SAVE. Student loan borrower advocates have warned that this could dramatically increase the monthly payments for millions of Americans. The bill would create a new IDR plan called the Repayment Assistance Plan, but the Senate version appears to strip out certain protections for married borrowers that were in the House version of the bill, potentially increasing their payments, as well.
Meanwhile, the department is moving forward with negotiated rulemaking to enact what could be significant regulatory changes to the PSLF program. President Trump issued an executive order in March to bar student loan forgiveness under PSLF for organizations that the administration deems are engaged in 'illegal' or improper behavior, and the order directed the department to draft regulations to implement those restrictions. Critics have argued that this is an attempt to 'weaponize' PSLF against nonprofit organizations, state governments, and cities that oppose the Trump administration's priorities, and would hurt student loan borrowers while chilling public service work. Some observers expect there to be legal challenges if the proposals are implemented.
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