Student-loan borrowers in public service are in a growing debt relief bind

• Thousands of student-loan borrowers in public service are waiting for relief to be processed.
• The Education Department is also planning to implement a new rule that would limit PSLF eligibility.
• Advocates filed lawsuits to block the new rule, arguing it could keep eligible borrowers from relief.

A major program for student-loan borrowers in public service is facing big changes — and delays.

Over 7 million borrowers are pursuing the Public Service Loan Forgiveness program, which forgives student debt for government and nonprofit workers after 10 years of qualifying payments.

Thousands of those borrowers, though, might have completed their qualifying payments but are still waiting for relief. That's because they applied for the PSLF buyback, which allows borrowers to "buy back" months spent in deferment or forbearance periods by making payments equal to what they would have owed at the time. Borrowers can apply for a buyback only if those payments would enable them to reach the 120-payment threshold for relief.

A recent court update from the Department of Education reported an increase in the backlog of buyback processing. The filing said that 83,370 applications were pending as of December 31. Over the month of December, the department approved 1,690 buyback applications and received an additional 5,090.

The department wrote in its filing that "the PSLF Buyback database is dynamic; approval/denial data is inherently subject to change; and FSA can only see an application's current status, not past statuses."

"For example, an application might be closed in December because the application package was incomplete, but then reopened and approved in January after the application package is supplemented with the necessary information," the department said.

Some borrowers seeking a PSLF buyback were also enrolled in the SAVE income-driven repayment plan, which would have allowed for cheaper monthly payments and a shorter timeline to debt relief. Due to litigation, the SAVE plan has been in forbearance for over a year, meaning borrowers were not receiving credit toward PSLF during that period. The buyback would allow some of those borrowers to receive relief.

In addition to the buyback, the Department of Education is set to implement a new rule this summer that would limit PSLF eligibility, a move critics said would lock some public service borrowers out of relief. More broadly, the department is working to implement its sweeping student-loan repayment changes, which include new income-driven repayment plans and borrowing caps. Borrowers could face higher monthly payments as a result.

Broader changes to PSLF

At the end of October, the Department of Education finalized its rule to narrow employers' eligibility for PSLF following an executive order from President Donald Trump that called for the department to "redefine" public service.

The rule, set to go into effect in July 2026, would change the definition of a qualifying employer "to exclude employers that participate in illegal activities such that they have a substantial illegal purpose."

While there are no changes to the program yet, advocates have expressed concern that altering the program's eligibility could block some borrowers from debt relief if their employers' political views do not align with the administration's. Some of those advocates sued the administration; in November, for example, advocacy groups Protect Borrowers and Democracy Forward filed a lawsuit on behalf of over a dozen cities, labor unions, and nonprofits to block the rule from going into effect.

In a separate lawsuit, advocates said in a court filing last week that the department's rule is "irremediably vague" and that "there is no evidence that the problem the Rule purports to address has ever arisen."

Undersecretary of Education Nicholas Kent said in a statement in response to the lawsuits that "the final rule is crystal clear: the Department will enforce it neutrally, without consideration of the employer's mission, ideology, or the population they serve."

While it's unclear how the lawsuits will evolve and how the department will implement the rule, some PSLF borrowers told Business Insider they're worried they'll lose the relief that they've been working toward.

"I'm so close to the finish line," Jeff Hughes, a PSLF borrower, said. "I really hope that the program continues as is because we need some more good people out there doing good work."

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