US student loan forgiveness backlog hits 74k under Trump: Here's why it's growing so fast

More than 74,000 national pupil indebtedness borrowers successful the US are presently waiting for their applications to beryllium processed nether a cardinal indebtedness forgiveness programme, according to recently filed tribunal documents.

The backlog, linked to the Public Service Loan Forgiveness (PSLF) Buyback initiative, has continued to turn nether President Donald Trump's administration.As of August 31, 74,510 applications were pending reappraisal by the US Department of Education. This is up from 72,730 successful July and 65,448 astatine the extremity of June. The PSLF Buyback programme allows eligible borrowers to retroactively acquisition months of qualifying recognition towards indebtedness forgiveness that were antecedently ineligible owed to forbearance oregon deferment.Backlog grows arsenic exertion measurement risesThe PSLF Buyback initiative, archetypal launched nether the Biden medication successful 2023, gained popularity aft ineligible blocks were placed connected the SAVE (Saving connected a Valuable Education) program successful 2024. Many borrowers who had enrolled successful the SAVE program were automatically placed into forbearance during tribunal proceedings. As a result, their advancement toward PSLF recognition was frozen, adjacent though they continued to enactment successful qualifying nationalist work roles.

The Buyback programme offered a mode to regain that mislaid clip by allowing borrowers to “buy back” missed months—provided they had completed 120 months of qualifying nationalist work employment. However, processing delays person near tens of thousands waiting for a determination connected their eligibility.Court filings, referenced by CNBC, revealed that successful August alone, lone 5,600 buyback applications were processed.

Meanwhile, the wide backlog continues to emergence month-on-month.Staff cuts lend to slower processingAccording to CNBC, the delays person coincided with staffing changes wrong the Education Department. In March, the Trump medication terminated astir fractional of the department’s personnel, including those straight liable for supporting borrowers.The American Federation of Teachers has filed a lawsuit, alleging that the section is preventing eligible borrowers from accessing their rights.

As portion of ongoing ineligible proceedings, the Department has been required to disclose information related to pending buyback applications.Ongoing challenges for borrowersBorrowers who spoke with CNBC reported waiting up to six months oregon much for updates connected their applications. Despite the delays, user advocates proceed to promote eligible individuals to apply.Nancy Nierman, adjunct manager astatine the Education Debt Consumer Assistance Program successful New York, told CNBC that determination is “no harm successful submitting the application” if a borrower meets eligibility requirements.

However, she advised that borrowers who tin spend to proceed payments should not trust solely connected the Buyback programme, particularly if they are lone a fewer months abbreviated of qualifying for forgiveness.Borrowers tin use done the PSLF Reconsideration portal connected their Federal Student Aid accounts. Upon application, the Education Department calculates the fig of missed qualifying payments and sends an connection letter.

The calculation typically depends connected the borrower’s outgo amounts earlier and aft the non-qualifying period, CNBC reported.Application process and repayment considerationsOnce the connection is received, borrowers person 90 days to marque the required outgo to their indebtedness servicer. Some low-income borrowers whitethorn beryllium eligible for zero-dollar buyback payments, depending connected their past outgo past and income levels.In summation to PSLF Buyback delays, much than 1 cardinal repayment program alteration requests are besides pending with the Education Department, according to tribunal filings cited by CNBC.Interest connected national pupil loans resumed successful August, adjacent for those presently successful forbearance nether the SAVE plan. However, if a borrower makes much than the required 120 payments oregon continues paying portion waiting for a decision, they whitethorn beryllium eligible for a refund, higher acquisition adept Mark Kantrowitz told CNBC.