Latest news with #PSLFBuyback
CNBC
30-07-2025
- Business
- CNBC
38-year-old woman has already waited eight months in a 65,448-person backlog for Public Service Loan Forgiveness
Katy Punch has worked as a librarian in North Carolina for more than a decade — a stretch of time that makes her eligible to get her federal student debt excused under the Public Service Loan Forgiveness program. PSLF, which President George W. Bush signed into law in 2007, allows certain not-for-profit and government employees to have their federal student loans canceled after 120 payments, or 10 years. However, recent changes to the student loan system have made it difficult, if not impossible, for public servants to access that relief. Under the Biden administration, Punch, like millions of other borrowers, enrolled in the Saving on a Valuable Education repayment plan. But when SAVE became mired in political challenges brought by GOP-led states, Punch's monthly loan payments were paused in a forbearance during the summer of 2024 — and, along with it, her progress towards PSLF. More from Personal Finance:Trump's 'big beautiful bill' includes these key tax changes for 2025Student loan bills to double for some borrowers as Biden-era relief expiresWhat a Trump, Powell faceoff means for your money The timing for Punch couldn't have been more frustrating: When the Biden administration put SAVE borrowers into forbearance, she was just five payments away from getting her roughly $30,000 student debt balance wiped away. But her loans have now been in the SAVE forbearance for around a year. "It feels like I'm having the rug pulled out from under me when I was so close to the finish line," said Punch, 38. The Biden administration created a program that should have been perfect for people like Punch: PSLF Buyback. The opportunity allows borrowers who've hit 120 months of qualifying employment to submit a request to the Education Dept. to retroactively pay for any months they missed because of a forbearance or deferment. However, buyback applications have piled up under the Trump administration. Punch submitted her buyback request in November. Around eight months later, she still hasn't heard anything. "I will gladly pay the five months, but the Department of Education will not let me," Punch said. Tens of thousands of borrowers find themselves stuck in the same predicament as Punch. Roughly 65,448 PSLF buyback requests were pending with the U.S. Department of Education as of the end of June, according to recent court documents. The bottleneck has only worsened since May, when close to 59,000 applications were under review by the Trump administration. "The Biden Administration introduced the Public Service Loan Forgiveness buy-back program to allow borrowers to 'buy' eligibility into the program — weaponizing a legal discharge plan for political purposes," said Ellen Keast, deputy press secretary at the Education Dept. "The Department is working its way through this backlog while ensuring that borrowers have submitted the required 120 payments of qualifying employment," Keast said. The numbers show that PSLF and the buyback option are "functionally unavailable," said Randi Weingarten, president of the American Federation of Teachers. (The Education Dept. has regularly shared the data on pending buyback requests as part of a lawsuit AFT filed against it. The teacher's union alleges the agency is blocking borrowers from their rights.) "It is clear that this administration has no intention of helping working people," Weingarten said. The backlog means that borrowers who believe they're entitled to student loan forgiveness are still stuck carrying their debt and possibly making payments, said higher education expert Mark Kantrowitz. "It is inappropriate for the U.S. Department of Education to slow-walk the forgiveness," Kantrowitz said. At its current rate, it would take the federal government more than two years to process the current applications, he said, "even as the backlog continues to grow due to new applications." The Trump administration's mass terminations at the Education Dept. are to blame, at least in part, for the pileup, said Stephanie Sampedro, who used to work in the Federal Student Aid office at the agency. The department announced a reduction in force on March 11 that gutted the agency's staff by half. "With the layoffs, there are fewer staff to review, calculate buyback payments and process applications for borrowers," said Sampedro, who was part of those March terminations. "Waiting for debt relief hurts everyone," Sampedro added. "People are stressed and trying to plan for the future with total uncertainty." While the Education Department works through the buyback pileup, borrowers can either stay in the SAVE forbearance, where their debt will continue to accrue interest starting again in August, or enroll in another PSLF-eligible repayment plan where they're required to make monthly payments. Yet borrowers who believe they're eligible for loan forgiveness now — or, in Punch's case, since November — may not want to spend months switching into a new repayment plan and then making payments on a debt they shouldn't owe anymore. In the meantime, the delayed student loan forgiveness can trigger a cascade of financial consequences for borrowers, consumer advocates said. Research has found student loan payments make it harder for people to save for their futures, open businesses and start families. Recently, Punch feels like her life is on hold while she waits to hear if her debt will be excused. If the Trump administration forgives her loans, she said, she'd be able to save more for retirement and salt away money toward her child's education down the line. She could also finally get some of the repairs and needed improvements done on her house that she's put off because of her student debt. "I have dedicated my life to serving in public libraries," Punch said. "That something I earned has been delayed is really upsetting." Are you also waiting for student loan forgiveness under PSLF buyback? If you're willing to share your experience for a story, I'd love to hear from you at
Forbes
16-07-2025
- Business
- Forbes
New Update On Student Loan Repayment Backlog And PSLF Buyback Raises Alarms
US Secretary of Education Linda McMahon stands in the driveway outside the West Wing of the White ... More House, following a television interview in Washington, DC, on July 15, 2025. McMahon filed a court declaration this week providing updated figures on the department's progress in working through a backlog of student loan forgiveness and repayment plan applications. (Photo by Jim WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images) 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.
Forbes
24-06-2025
- Business
- Forbes
58,000 Borrowers Are Stuck Waiting For Student Loan Forgiveness, And The Backlog Is Growing
UNITED STATES - MAY 21: Education Secretary Linda McMahon testifies during the House Appropriations ... More Subcommittee on Labor, Health and Human Services, Education, and Related Agencies hearing on the Department of Education's budget on Wednesday, May 21, 2025. The department is struggling to work through a backlog of PSLF Buyback applications for borrowers pursuing student loan forgiveness. (Tom Williams/CQ-Roll Call, Inc via Getty Images) More than 58,000 borrowers who may qualify for student loan forgiveness under a new program and have submitted an application have received no response from the Department of Education, in some cases nearly a year after submission. And the department's backlog of requests appears to only be increasing. These borrowers have requested relief through the PSLF Buyback program, a relatively new option that allows those who are pursuing Public Service Loan Forgiveness to make a lump sum payment to convert certain forbearance periods (which typically don't count toward student loan forgiveness) into qualifying months of repayment for the PSLF program. PSLF Buyback was created by the Biden administration as a safe harbor option for those who were placed in a non-qualifying forbearance period, sometimes involuntarily, even while they continued working in eligible public service employment. But thousands of borrowers who have applied for PSLF Buyback have been stuck in limbo. And according to a court filing released by the Department of Education last week, the backlog is growing, even as the department makes some progress in processing these applications. Here's where things stand. How Student Loan Forgiveness For PSLF Buyback Works PSLF Buyback was created by the Biden administration in 2023 to give borrowers on track for Public Service Loan Forgiveness an additional pathway to relief. PSLF requires 120 qualifying monthly payments – the equivalent of 10 years – to receive any student loan forgiveness. Importantly, borrowers must be making payments under approved repayment plans (typically Income-Driven Repayment, or IDR, plans) while working full-time for eligible nonprofit or government employers. Periods of non-payment, including deferment and forbearance periods, have historically not counted, even when borrowers were pushed into a forbearance by their loan servicer or they did not specifically request it. The PSLF Buyback program was intended to address this issue, as it has been common for borrowers to be placed into forbearances at various times during their repayment period. The buyback program allows borrowers to make a payment covering the non-qualifying forbearance months based on what they would have paid if they had been in repayment on their student loans during that period. 'Due to changes in PSLF regulation, you can now buy back certain months in your payment history to make them qualifying payments for PSLF,' says Department of Education guidance. 'Specifically, you can buy back months that don't count as qualifying payments because you were in an ineligible deferment or forbearance status.' The program does have some important restrictions. Borrowers can't apply for PSLF Buyback until they have 120 months of certified public service employment. Furthermore, the bought back months – if approved – must allow the borrower to reach the 120-payment threshold for student loan forgiveness. 'The buyback opportunity is only available to you if you already have 120 months of qualifying employment and buying back months in forbearance or deferment would result in forgiveness under PSLF or Temporary Expanded PSLF (TEPSLF),' says the department. 'PSLF buyback is available for months on Direct Loans with a positive balance that coincide with qualifying employment when you were: in deferment, in forbearance, or in deferment or forbearance after the first disbursement date of a Direct Consolidation Loan.' In-school periods, grace periods, and periods of default, bankruptcy, or disability discharge monitoring are ineligible for PSLF Buyback, as are periods prior to your most recent Direct loan consolidation. Typically, the buyback amount would be calculated based on what the borrower's student loan payments were under their IDR plan at the time that the forbearance period began. Otherwise, the Department of Education might need income information from the borrower to determine what their IDR payment amount would have been during the period subject to PSLF Buyback. Thousands Of Borrowers Are Waiting For Student Loan Forgiveness Under PSLF Buyback But two years after the PSLF Buyback program first went live, the Department of Education is struggling with its implementation. Thousands of borrowers who are pursuing student loan forgiveness through PSLF but have been stuck in the SAVE plan forbearance have submitted buyback applications. A federal court blocked the SAVE plan last summer following a legal challenge brought by Republican-led states, and as a result, more than eight million people were forced into a forbearance that doesn't count toward student loan forgiveness. The department has specifically advised these borrowers that they could apply for PSLF Buyback, once they are eligible, to receive PSLF credit for the SAVE plan forbearance period. 'Some borrowers may be eligible to 'buy back' months of PSLF credit for time spent in forbearance as a result of the court's injunction,' says a Department of Education notice on the ongoing SAVE plan legal challenge. 'Borrowers with 120 months of eligible employment can buy back (make payments to cover) past months that were not originally counted as qualifying payments because the borrower was in an ineligible deferment or forbearance status.' But as borrowers have rushed to apply for PSLF Buyback, the department has been unable to keep up with the influx of applications. Last month, department officials revealed in court filings that only a little more than 1,400 buyback applications were been processed, with more than 49,000 outstanding. Then last week, the department provided updated figures suggesting the backlog was worsening, with at least 58,761 PSLF Buyback applications still in the queue, and only 3,312 processed. Some Borrowers Seeking Student Loan Forgiveness Are Getting PSLF Buyback Approval, Slowly The deepening PSLF Buyback crisis comes only a few months after the Trump administration initiated a massive reduction in force at the Department of Education, resulting in roughly half of the department's staff resigning or being laid off. The Office of Federal Student Aid, which oversees the federal student loan system and whose staff would be tasked with processing student loan forgiveness applications for PSLF Buyback, was particularly hard hit. The "reduction in force reflects the Department of Education's commitment to efficiency, accountability, and ensuring that resources are directed where they matter most: to students, parents, and teachers,' said Secretary of Education Linda McMahon in a statement announcing the staff reductions in March. Meanwhile, many student loan borrowers have been waiting months for PSLF Buyback determinations. 'I submitted my first buyback request on November 12th; crossing my fingers that I get my request approved soon,' posted one Reddit user in a PSLF forum in March. 'I submitted mine on 12/10/24 and am still waiting back,' said another Reddit user last week. 'I submitted my buyback request on 12/6/24 as well,' posted another borrower last week. 'The case has not been closed, and I haven't received a reply yet.' But other Reddit users have recently been posting that they are starting to receive PSLF Buyback determinations, giving them the opportunity to make a lump sum payment and qualify for student loan forgiveness. 'Just got a buyback offer for my SAVE months July - October,' posted a Reddit user last week. 'These months will put me at 120. I'm currently at 116 QP through June 2024, with certified eligible employment through October 2024 which would put me at 120 but July - Oct are all ineligible due to SAVE. I submitted a buyback request for these last 4 months to complete my 120.' The user noted that they 'submitted ONE buyback request on 12/6/24.' Several other borrowers in recent days have made similar posts on Reddit with PSLF Buyback success stories. This suggests that PSLF Buyback processing is happening. But unless the Department of Education rapidly accelerates that processing, at this rate it may take years for the Office of Federal Student Aid to work its way through the 58,000 application backlog, trapping many borrowers in student loan forgiveness limbo for the foreseeable future.
