The repurchase of student debt for thousands of borrowers is now in limbo. Actions taken under the Trump administration have significantly hampered the Department of Education’s ability to process applications, creating a historic backlog that’s hitting Public Service Loan Forgiveness (PSLF) recipients hard.
The PSLF program, launched in 2007, allows qualifying government and nonprofit employees to have their student loans forgiven after 10 years of service.
A legal dispute over the SAVE program led to millions of borrowers being placed into forbearance starting in mid-2024. Combined with the Biden administration’s introduction of the PSLF Buyback in summer 2023, these two factors have collided to create a massive processing bottleneck.
Trump-era cuts create a bottleneck
The pace of PSLF buyback application processing took a major hit following staff cuts by the Department of Government Efficiency (DOGE). These layoffs slashed the Department of Education’s workforce by half, triggering a surge in unresolved applications.
According to media reports, as of August 31, there were 74,510 pending applications-up from 72,730 in July and 65,448 in June. Official figures show that only 5,600 applications were processed in August.
The Department of Education now releases regular reports on student debt buyback applications, following a lawsuit filed by the American Federation of Teachers. Meanwhile, outlets like CNBC report that some applicants have waited up to 10 months for a resolution.
What should you do if you’re eligible for the PSLF Buyback?
The SAVE program’s forbearance has made millions of borrowers eligible for the PSLF buyback. Despite the delays, personal finance experts still recommend applying.
However, experts caution against relying solely on full debt repurchase. If you qualify for an income-driven repayment (IDR) plan, it’s wise to enroll as soon as possible. This allows you to continue making payments-and if your buyback is approved, you can pay off the remaining balance in a lump sum.
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