The U.S. Department of Education is facing a growing backlog in processing applications for the Public Service Loan Forgiveness (PSLF) Buyback program, even as it prepares to implement changes to the broader PSLF program that advocates fear will limit eligibility for some borrowers.
As of December 31, 83,370 PSLF Buyback applications were still pending, according to a recent court filing by the Department of Education. The department approved 1,690 applications in December although receiving 5,090 new submissions, indicating the backlog is increasing despite processing efforts. The department acknowledged the dynamic nature of the database, stating that application statuses can change as borrowers supplement incomplete packages with required information.
The PSLF Buyback program, launched in the fall of 2023, allows borrowers pursuing PSLF to retroactively count months spent in deferment or forbearance toward the 120 qualifying payments required for loan forgiveness. Borrowers must make payments equivalent to what they would have owed under an income-driven repayment plan at the time of the deferment or forbearance to receive credit.
The backlog is particularly concerning for borrowers who were too enrolled in the SAVE income-driven repayment plan, which has been subject to litigation and a period of forbearance lasting over a year. During this period, borrowers were not accruing qualifying payments toward PSLF. The Buyback program offers a potential path to relief for these borrowers by allowing them to account for previously ineligible months.
Simultaneously, the Department of Education is moving forward with a rule finalized in October 2024 that narrows the definition of qualifying employers for PSLF. This rule, stemming from an executive order issued by former President Donald Trump, aims to exclude employers engaged in illegal activities. However, advocacy groups, including Protect Borrowers and Democracy Forward, have filed lawsuits challenging the rule, arguing We see “irremediably vague” and could disqualify borrowers based on their employers’ political views or activities.
In a statement responding to the lawsuits, Undersecretary of Education Nicholas Kent asserted that the rule would be enforced neutrally, without considering an employer’s mission or ideology. The department maintains that the rule is “crystal clear” in its intent to exclude employers with a “substantial illegal purpose.”
PSLF borrowers have expressed anxiety about the potential impact of the new rule. Jeff Hughes, a borrower working toward PSLF, stated, “I’m so close to the finish line. I really hope that the program continues as is since we need some more good people out there doing good work.”
The Department of Education’s new rule is set to take effect in July 2026. The outcome of the ongoing lawsuits will determine whether the rule is implemented as planned, potentially altering the landscape of PSLF eligibility for public service workers.
