Student loan borrowers and changes to Public Service Loan Forgiveness

A popular student loan forgiveness program, Public Service Loan Forgiveness, has always had its problems.

But borrowers pursuing PSLF have faced some especially challenging changes of late that have made it harder — if not impossible — to access the relief.

PSLF, which President George W. Bush signed into law in 2007, allows many not-for-profit and government employees to have their federal student loans canceled after a decade of payments.

Here are three challenges impacting PSLF borrowers, and what you can do about them.

President Donald Trump signed an executive order on March 7 that aims to limit eligibility for PSLF.

According to Trump’s executive order, borrowers employed by organizations that do work involving “illegal immigration, human smuggling, child trafficking, pervasive damage to public property and disruption of the public order” will not be eligible for Public Service Loan Forgiveness.

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Experts say borrowers’ best option right now is to stay the course, assuming their current employer has previously been considered qualifying.

That’s because it remains unclear exactly which organizations will no longer be considered a qualifying employer for PSLF under Trump’s order. Some experts say the changes to eligibility could be challenged in court.

Whatever the outcome, the overhaul of the PSLF program can’t be retroactive, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit that helps borrowers navigate the repayment of their debt.

That means that if you are currently working for or previously worked for an organization that the Trump administration later excludes from the program, you’ll still get credit for that time — at least up until the changes go into effect.

“If an organization is deemed illegal, the borrower can switch jobs to another that isn’t considered illegal,” said higher education expert Mark Kantrowitz.

To get your student debt forgiven under PSLF, you need to make your 120 monthly payments while enrolled in an eligible repayment plan. That has been a challenge for some borrowers of late.

The Saving on a Valuable Education, or SAVE, plan, is now defunct and not a viable way for borrowers to repay their debt and eventually earn PSLF. But millions of borrowers enrolled in the Biden-era SAVE plan before it was blocked in the courts, and leaving the program hasn’t proven easy.

As of the end of June, there was a backlog of more than 1.5 million pending applications by borrowers trying to access a new student loan repayment plan, according to court documents.

“The problem is the forms to switch into another plan are not being processed,” Kantrowitz said.

(The Education Department has regularly shared the data on pending repayment plan requests as part of a lawsuit the American Federation of Teachers filed against it. The teacher’s union alleges the agency is blocking borrowers from their rights.)

Fortunately, “borrowers who are affected by the processing backlog will eventually be switched into a qualifying repayment plan,” Kantrowitz said.

When you apply for a new repayment plan, the first 60 days that your debt remains in a so-called processing forbearance do count toward PSLF, Kantrowitz added. It’s when, and if, your debt is switched into a general forbearance that your progress toward forgiveness is halted.

The Biden administration created a program called PSLF Buyback, which 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. Historically, these periods of nonpayment didn’t earn borrowers PSLF credit.

However, buyback applications have also piled up under the Trump administration.

Roughly 65,448 PSLF buyback requests were pending with the government as of the end of June. The bottleneck has only worsened since May, when close to 59,000 applications were under review by the Trump administration.

“The Department is working its way through this backlog while ensuring that borrowers have submitted the required 120 payments of qualifying employment,” said Ellen Keast, deputy press secretary at the Education Department.

Despite the significant backlog, “if you are eligible for the Buyback, there’s no harm in submitting the application,” said Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program in New York.

You can apply for Buyback through the PSLF Reconsideration portal on your Federal Student Aid account, she said.

“But if you can afford payments in other repayment plans, don’t rely solely on the Buyback to get you to 120 qualifying payments, particularly if you only need a few months of credit to reach forgiveness,” Nierman said.

You can apply for Buyback and also submit paperwork to switch into another repayment plan at the same time.