Student Loan Borrowers Struggle for Public Service Loan Forgiveness

Understanding the Challenges Faced by Public Service Loan Forgiveness Borrowers

Public Service Loan Forgiveness (PSLF) is a program designed to help individuals working in public service sectors, such as government and non-profit organizations, to have their federal student loans forgiven after making 120 qualifying payments. However, recent changes and administrative challenges have made it increasingly difficult for borrowers to access this relief.

Eligibility Changes Under the Trump Administration

One of the most significant challenges facing PSLF borrowers is the potential change in eligibility criteria under the Trump administration. In March 2023, President Donald Trump signed an executive order aimed at limiting eligibility for PSLF. According to the order, borrowers employed by organizations involved in activities such as illegal immigration, human smuggling, child trafficking, or other disruptive actions may no longer qualify for the program.

Experts suggest that borrowers should continue with their current employment if it has been considered eligible in the past. The changes to eligibility are still being challenged in court, and it remains unclear which specific organizations will be excluded from the program. Importantly, any changes to the PSLF program cannot be applied retroactively, meaning that time spent working for an organization that may later be excluded will still count toward forgiveness.

Borrowers who find themselves in an ineligible organization can switch jobs to another that meets the requirements. This flexibility allows them to continue on the path to loan forgiveness without losing progress.

Repayment Plan Troubles Stall Progress

Another major hurdle for PSLF borrowers is the difficulty in accessing and switching to eligible repayment plans. The Saving on a Valuable Education (SAVE) plan, introduced during the Biden administration, was designed to help borrowers manage their payments and eventually qualify for PSLF. However, the SAVE plan was blocked by the courts, leaving many borrowers in limbo.

As of June, there were over 1.5 million pending applications for new repayment plans, according to court documents. The backlog has caused delays in processing forms to switch into other plans. While borrowers affected by the backlog will eventually be moved into a qualifying repayment plan, the process can be slow.

It's important to note that the first 60 days of a payment period in processing forbearance do count toward PSLF. However, if the debt is switched into general forbearance, progress toward forgiveness is halted. Borrowers should remain proactive in managing their repayment plans to avoid setbacks.

Buyback Backlog Leaves Borrowers Waiting

The Biden administration introduced the PSLF Buyback program, which allows borrowers who have completed 120 months of qualifying employment to submit requests to retroactively count missed months due to forbearance or deferment. This program was intended to provide relief to borrowers who had gaps in their payments.

However, the Trump administration has seen a significant backlog in processing these buyback applications. As of June, approximately 65,448 applications were pending, with the number increasing since May. The Department of Education is working through the backlog while ensuring that all required 120 payments are verified.

Despite the delays, experts recommend that borrowers apply for the Buyback program if they are eligible. It is also advisable to apply for a new repayment plan simultaneously, especially if only a few months of credit are needed to reach the 120-payment threshold. Borrowers can apply for the Buyback through the PSLF Reconsideration portal on their Federal Student Aid account.