58,000 Borrowers Are Stuck Waiting For Student Loan Forgiveness, And The Backlog Is Growing

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.