Public Service Loan Forgiveness becomes harder for borrowers to get

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 toward PSLF.

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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 Department 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 Department.

“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 [email protected].