Latest news with #PublicServiceLoanForgiveness
Forbes
2 days ago
- Business
- Forbes
New Update On Student Loan Repayment Backlog And PSLF Buyback Raises Alarms
US Secretary of Education Linda McMahon stands in the driveway outside the West Wing of the White ... More House, following a television interview in Washington, DC, on July 15, 2025. McMahon filed a court declaration this week providing updated figures on the department's progress in working through a backlog of student loan forgiveness and repayment plan applications. (Photo by Jim WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images) Secretary of Education Linda McMahon submitted a new court filing on Wednesday providing updates on the status of a massive backlog associated with pending income-driven repayment plan requests and student loan forgiveness applications for the PSLF Buyback program. The latest filing suggests that the Department of Education continues to make painfully slow progress in working through the application backlogs. And in light of new developments associated with recent legislative and policy changes, the backlogs may actually soon get worse. The latest filing by the Trump administration is part of an ongoing lawsuit filed by the American Federation of Teachers over stalled applications for income-driven repayment plans and PSLF Buyback. The Trump administration had halted IDR application processing earlier this spring, arguing that a pause was required to update its systems to comply with a new court order associated with a separate ongoing legal challenge over the SAVE plan. The AFT argued in its lawsuit that the IDR shutdown was unlawful, and was also preventing borrowers from pursuing Public Service Loan Forgiveness, a separate program that can provide student loan forgiveness to teachers, nurses, firefighters, and other public servants after 10 years of qualifying payments. After the AFT filed its suit, the Department of Education resumed processing IDR requests. But the temporary shutdown exacerbated an existing backlog of applications. In the meantime, many borrowers pursuing PSLF who were stuck in the SAVE plan forbearance and were nearing the threshold for student loan forgiveness applied for PSLF Buyback because they were unable to quickly change their repayment plan. PSLF Buyback is a relatively new program that allows borrowers to make a lump sum payment so that prior periods of non-qualifying deferments or forbearance can count toward student loan forgiveness. But the surge in PSLF Buyback requests also caused a massive backlog, which was likely worsened by mass staff layoffs the Trump administraiton implemented at the Department of Education. In April, the AFT and the department reached a temporary agreement whereby Trump administration officials would provide monthly updates on the application backlog associated with IDR requests and PSLF Buyback. In the meantime, the litigation would be temporarily paused to assess this progress. Secretary McMahon filed the department's third such update on Wednesday. But the newest update shows that the department is still struggling to process applications for repayment plans and student loan forgiveness, just as the department is pushing millions of additional borrowers to switch plans in the face of new policy and legislative developments. Here's the latest. Trump Administration Struggles To Process Surge Of Student Loan Repayment Requests The Department of Education latest status report on IDR application processing shows that administration officials and student loan servicers have made only a little dent in the backlog. While the IDR application backlog has been reduced from nearly two million requests through April 30, the total current backlog is largely unchanged from the previous month. At the end of May, the department had processed 285,694 IDR applications, with 1,582,641 applications remaining in the queue. As of Wednesday's update – which reflects processing figures through June 30 – the department has only processed an additional 186,731 applications, suggesting a significantly slower rate of processing in June as compared to May. And, concerningly, the total number of IDR applications in the backlog stood at 1,511,504 – largely unchanged from the prior filing. If processing continues at the current rate (a net backlog reduction of roughly 70,000 applications), it would take nearly two years for the department to clear the backlog. The Department maintains that it is making progress in working through the IDR application backlog, and blames the Biden administration for the large number of student loan repayment plan requests that remain in the queue. 'The Department continues to make progress on the backlog of submitted IDR applications because of a processing pause put in place by the Biden Administration,' said the department in a statement last week. 'Borrowers switching from the SAVE Plan to another IDR plan can expect quick and timely processing.' Backlog Of Student Loan Forgiveness Requests For PSLF Buyback Grows Again The latest filing also presented equally concerning updates about the PSLF Buyback backlog, which continues to move in the wrong direction. In the department's initial filing in May, the backlog of student loan forgiveness requests under PSLF Buyback stood at more than 49,000. The backlog then grew to more than 58,000 the following month, despite the department having processed several thousand PSLF Buyback requests. Wednesday's filing indicates that the department has now processed another 2,224 PSLF Buyback applications, reflecting additional progress. But The PSLF Buyback application backlog has grown yet again from more than 58,000 at the end of May to 65,448 as of June 30. This means the backlog has grown by roughly a third over the course of the last three months, despite steady processing by the department. Application Backlogs For Student Loan Forgiveness And Repayment May Soon Worsen This bad news for student loan borrowers may only get worse due to new policy and legal developments. Last week, the Trump administration abruptly announced that starting on August 1, the Department of Education will begin charging interest on federal student loans that are subject to the SAVE plan forbearance. Borrowers enrolled in SAVE have had no payments and no interest accrual since last year due to the ongoing legal challenge over the future of the program. The administration argued that the resumption of interest charges is necessary to comply with a new court order in that lawsuit. But student loan borrower advocacy groups noted that nothing in that latest order requires the department to start charging interest again on covered student loans. As a result of the administration's decision to resume charging interest on student loans subject to the SAVE plan, the department is now actively encouraging more than 7.7 million borrowers to apply to switch to a different income-driven repayment plan. The department also noted that the future of the PAYE and ICR plans is also in doubt, particularly after President Trump's so-called 'Big, Beautiful Bill' authorized the eventual repeal of PAYE and ICR, as well as the SAVE plan. The department suggested that these borrowers also consider applying to change their repayment plan. The Income-Based Repayment plan, or IBR, would be the only alternative option. This could potentially add millions of additional applications to the existing backlog in the coming weeks and months. 'The Department urges all borrowers in the SAVE Plan to quickly transition to a legally compliant repayment plan – such as the Income-Based Repayment Plan,' said Secretary McMahon in a statement last week announcing the resumption of interest accrual. "Borrowers in SAVE cannot access important loan benefits and cannot make progress toward loan discharge programs authorized by Congress.' What Student Loan Borrowers Can Do Some student loan servicers have urged borrowers who applied for an IDR plan in April of this year or earlier to resubmit their application online using the newly restored IRS data retrieval tool, which can expedite application processing by automatically verifying a borrower's income. The Department of Education appears to encourage using this feature, as well. 'Applying for an IDR Plan is quick and easy if borrowers provide consent for the Department to obtain their federal tax information directly from the Internal Revenue Service,' said the department. 'This allows the Department to process borrowers' IDR applications faster and eliminates the need for borrowers to manually upload their income information.' The department noted that student loan borrowers who provide this consent would also be eligible for automatic annual income recertification for existing IDR plans.
Time Magazine
09-07-2025
- Politics
- Time Magazine
Trump Seeking Changes to a Major Student Loan Relief Program
Tens of thousands of nonprofit employees could be affected by the Trump Administration's efforts to narrow a student loan cancellation program that aids public service workers. Employees at organizations that do work related to issues including immigration and gender-affirming-care would be at risk of losing eligibility for the Public Service Loan Forgiveness (PSLF) program, which has wiped the student loan debts of hundreds of thousands of government employees and others at certain nonprofit organizations, if changes proposed by the Administration are adopted. President Donald Trump directed that PSLF be reshaped in a March Executive Order that claimed the program aided 'activist organizations" that harm 'national security and American values.' Trump asked federal officials to propose revisions to exclude certain organizations that he said 'engage in activities that have a substantial illegal purpose' from being eligible for forgiveness under the program. The order noted that such activities would include 'aiding or abetting' violations of federal immigration law or 'illegal discrimination' and providing gender-affirming care for those aged 18 or under, among other things. A draft proposal of changes has since been released by the Education Department, which is now putting together a formal proposal that could take effect next year. Critics argue that the proposed adjustments would specifically target employees working for organizations that oppose the Trump Administration's agenda, which in part includes more aggressive immigration enforcement and the targeting of gender-affirming-care. The Department of Education did not respond to TIME's request for comment. Here's what to know about the program and how the Administration is seeking to change it. What is the Public Service Loan Forgiveness program? The Public Service Loan Forgiveness program, established under the College Cost Reduction and Access Act of 2007, offers tax-free loan forgiveness for government employees including teachers and firefighters and eligible nonprofit workers after they make 10 years of monthly payments towards their debt. The forgiveness is only available for full-time employees. It has been viewed as a strong incentive for those considering a public service career. More than a million borrowers have had their student loans cancelled through PSLF since December 2024, including 700,000 whose loans were forgiven under adjustments made by the Biden Administration to help more people earn forgiveness, according to the Department of Education. Prior to the changes, student loan forgiveness advocates criticized the program for its slow-moving application process that they said set back borrowers. An NPR report found that some borrowers enrolled in PSLF would make repayments towards the program for years before being told they didn't qualify due to having the incorrect loan or employer or failing to consolidate their loans. The Biden Administration sought to remedy 'past administrative failures' through an account adjustment plan that would allow borrowers to receive credit for previous months of repayment that were previously ineligible. That meant that payments made during periods of deferment or forbearance qualified towards the 10-year payment plan. More than 780,000 borrowers submitted an application for PSLF from July 2024 through December, per Federal Student Aid data. What changes is the Trump Administration proposing? The Trump Administration is seeking to alter the types of nongovernmental employees whose loans are eligible for forgiveness through PSLF. A draft proposal of the changes would prevent organizations engaged in 'illegal activities' from benefiting from PSLF. Its definition of activities that could bar organizations from eligibility, like that in Trump's Executive Order, would include violations of federal immigration law and providing gender-affirming care for minors, as well as 'child trafficking'—apparently also meant to target transgender minors—and discrimination. It defines 'illegal discrimination' as violations of the Civil Rights Act, which could include engagement in diversity, equity, and inclusion policies. In contrast with his predecessor, Trump has been a staunch critic of broad student loan forgiveness efforts. The White House has framed the proposed changes as a way to correct 'abuse' of the program following the Biden-era amendments that it said 'has increased the cost of tuition, burdened students with debt, and encouraged them to join organizations that undermine national security and the societal good.' Trump's Executive Order, the White House said in a March fact sheet, 'corrects this abuse by ensuring only legitimate public servants benefit, not those engaged in illegal or harmful activities.' Critics of the effort to narrow eligibility, however, say the impact of the changes could be widespread, punishing borrowers for legal actions. 'If the proposed changes take effect, the Secretary of Education will be able to disqualify millions of borrowers from PSLF as retribution for their employers' actions, even if those actions are legal,' Winston Berkman-Breen, legal director at the Student Borrower Protection Center, a nonprofit advocating for student loan forgiveness, wrote in a statement to TIME. Berkman-Breen warns that the 'illegal' actions the Administration appears to be targeting could be broad in scope. 'Public school systems that teach the history of slavery in the United States could be disqualified for 'aiding and abetting illegal discrimination.' Fire departments and other first responders could be disqualified if they serve in the local government of a Sanctuary City providing support to undocumented children and families,' he says. In order to assess eligibility, officials would review court judgements or other orders. A panel of experts was convened by the Department of Education to review the proposal from June 30 to July 2 and drafted potential amendments. These included limitations on the proposed changes including protections for actions that fell within employees' First Amendment rights. Ultimately, however, the panel failed to reach a consensus on recommendations. The department will next prepare a formal proposal, which will undergo a public comment period before potentially being finalized. Who could be impacted? The proposed changes could potentially affect any public service worker enrolled in the program, according to experts. 'The biggest concern is the amount of grey area that leaves room for the Department of Education to subjectively purge program participants,' says Jonathan Collins, assistant professor of political science and education at Teachers College, Columbia University. The draft proposal would nullify payments made while a worker was employed at an organization that was found to engage in an 'illegal purpose,' forcing them to find a new job if they want to be eligible for forgiveness. Berkman-Breen of the Student Borrower Protection Center calls the proposed amendments an attempt to 'attack civil society' and free speech. 'The proposal gives the Administration broadsweeping authority to play ideological politics with people's financial and professional lives,' he says.
Time of India
08-07-2025
- Politics
- Time of India
Student Loan Forgiveness programs to undergo massive changes under Trump 2.0. Are you at risk?
President Donald Trump is going to make a significant transformation of the Public Service Loan Forgiveness (PSLF) program. The proposed changes arrive based on concerns that federal funds have been used to support organizations that the administration views as acting outside the law. This has sparked fear that it will become a tool for political retribution, taking aim at organizations that serve immigrants and transgender youth. What is Public Service Loan Forgiveness program? Established in 2007, PSLF allows government employees, such as teachers and firefighters, plus many who work for nonprofits, to have their student loans canceled after they've made payments for 10 years. Government employees, healthcare workers, nonprofit staffers, and public defenders have all relied on PSLF and more than one million borrowers have already benefited from or are working toward forgiveness under it. Congress established the program in 2007 to motivate college graduates to pursue careers in the public sector, where pay is typically lower than in private industry. Under the program, borrowers who make 120 qualifying monthly payments while employed by any level of government are eligible to have their remaining student loan debt forgiven. Nonprofit employees can also qualify—provided their work focuses on areas such as public interest law, public health, or education. What are the proposed changes? Live Events The proposed changes from the White House, if implemented, would allow the Education Department to remove loan forgiveness eligibility from organizations it determines have engaged in "illegal activities." The overhaul in the policy would strip the benefit from organizations involved in 'illegal activities,' with the final determination left up to the US education secretary. A draft proposal released by the department includes definitions of illegal activity that center on immigration, terrorism and transgender issues. Definitions within the draft rules, including those related to immigration, terrorism, and transgender issues, have prompted concerns from advocates and education professionals about the potential for subjective or politically motivated enforcement. The draft proposal by the Education Department gives the secretary the power to determine which organizations have engaged in "illegal activities" and should be disqualified from PSLF. The proposal's focus includes organizations that allegedly aid federal immigration law violations, support foreign terrorist organizations, or contravene anti-discrimination statutes. 'That's definitely an indicator for me that this is politically motivated and perhaps will be used as a tool for political punishment,' Betsy Mayotte, president of the Institute of Student Loan Advisors and one of the advocates asked to review the policy as part of a rulemaking process, told AP. The ED convened a 10-person advisory panel to draft regulatory language for the PSLF overhaul. Who are at risk? If the proposed changes come into place, hospitals, schools and nonprofit organisations could be at risk. The proposal's definitions of illegal activity largely mirror those laid out by Trump. They include 'aiding or abetting' in the violation of federal immigration law, and supporting any group designated as a foreign terrorist organization. Also considered illegal is 'engaging in the chemical and surgical castration or mutilation of children in violation of Federal or State law.' It says that includes the use of hormone therapy or drugs that delay puberty. It defines children as those under 19. Entire hospital systems could become ineligible if a single department provides certain care to transgender youth. Cities with sanctuary policies or public schools promoting diversity and inclusion programs could be flagged under the new rules. Workers who have spent years working toward loan forgiveness may abruptly lose eligibility. Organizations would also be required to certify each year that they are not participating in any prohibited activities. Some borrowers fear they may now be forced out of PSLF eligibility due to their employers' activities. "For those currently enrolled in PSLF, now is the time to stay informed and connect with the entity overseeing your participation," Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. "While not all organizations will be affected, some could, and you don't want to be caught in a situation where the rules for forgiveness change, and you're unsure if you and your employer still qualify." Borrowers are unable to monitor progress toward forgiveness, and significant delays have emerged in updating PSLF statuses. While the PSLF tracker on remains online, updating remains inconsistent, further contributing to borrower uncertainty, according to Forbes. The Department of Education is currently preparing the final rule for public comment. If adopted, the changes would take effect in July 2026.
Mint
08-07-2025
- Politics
- Mint
Trump's student loan cancellation overhaul: Why hospitals, schools and non-profit organisations are at risk
US President Donald Trump is planning to reshape a student loan cancellation programme that experts say may become a tool for political retribution, aimed at organisations that serve immigrants and transgender youth. According to an AP report, the loan cancellation programme, Public Service Loan Forgiveness, allows government employees, such as teachers and firefighters, plus many who work for nonprofits, to have their student loans cancelled after they've made payments for 10 years. An overhaul of this programme, which the Education Department is reportedly working on, could strip the benefit from organisations involved in 'illegal activities'. A draft proposal released by the department includes definitions of illegal activity that centre on immigration, terrorism and transgender issues, the report said. Several advocates invited to weigh in on the draft proposal raised concerns it would give the department subjective authority to decide if an organisation is engaged in anything illegal — a power that could be used to remove entire hospital systems or state governments from the programme, AP report said. 'That's definitely an indicator for me that this is politically motivated and perhaps will be used as a tool for political punishment,' said Betsy Mayotte, president of the Institute of Student Loan Advisors and one of the advocates asked to review the policy as part of a rulemaking process. According to the report, over 1 million Americans have had loans cancelled through the programme, including nurses, college staffers, and park rangers. Started in 2007 by the Congress, the programme aimed to encourage college graduates to work in the public sector, where salaries are often lower than at for-profit companies. The programme promises to cancel all remaining debt after borrowers make 120 monthly loan payments while working for any level of government. Currently, nonprofits also are eligible if they focus on certain areas including public interest law, public health or education, the report added. President Trump had ordered changes in the programme in March, declaring it had 'misdirected tax dollars into activist organisations' that harm national security. Trump directed the Education Department to remove organisations tied to illegal activities, singling out those that work with immigrants or transgender youth or those that support terrorism – a label he often applies to pro-Palestinian activists. A federal database of eligible nonprofits currently includes some that provide grants to transgender youth and their families so they can travel to states that permit gender-affirming care for minors. It also includes some that provide legal services to immigrants regardless of their legal status, an AP report said. The planned overhaul could potentially block huge numbers of student loan borrowers from cancellation. Those who work for an ineligible employer would no longer be able to make progress toward cancellation, effectively forcing them to find a new job or forgo loan forgiveness. Needless to say, hospitals, schools, and nonprofits could be at the risk of being blocked if the overhaul of the loan forgiveness programme goes through, the report added. The proposal classifies 'illegal activities' as 'aiding or abetting' and supporting any group designated as a foreign terrorist organisation as 'in the violation of federal immigration law'. Also on the list are violations of the Civil Rights Act of 1964, a law Trump officials have invoked to root out diversity, equity and inclusion policies. 'Engaging in the chemical and surgical castration or mutilation of children" is considered illegal and "in violation of Federal or State law.' The proposal says this includes the use of hormone therapy or drugs that delay puberty, and defines children as those under the age of 19. It raises concerns that entire hospital systems could become ineligible if a single department provides certain care to transgender youth. Likewise, the federal government could potentially strip the benefit from entire cities that limit cooperation with federal immigration officials, as AP reported. 'I could see entire cities and entire civil structures being targeted,' said Alyssa Dobson, financial aid director at Slippery Rock University and a member of the rulemaking panel. It could also give the administration another tool in its campaign against universities that run afoul of the president's politics, she said.
Time of India
08-07-2025
- Politics
- Time of India
How Trump's new student loan rules could deny relief to public servants
Trump's new student loan policy President Donald Trump is steering a major transformation of the federal Public Service Loan Forgiveness (PSLF) programme, sparking concern that a system once rooted in civic reward may now be reshaped by political ideology. The proposed changes could disqualify thousands of government and nonprofit workers from loan relief based not on what they do, but where, and for whom, they work. A new policy being developed by the US Department of Education under Trump's directive would redefine eligibility for PSLF by targeting organisations deemed to be engaged in 'illegal activities.' Yet embedded in this definition are politically charged references to immigration, gender-affirming care, and foreign affiliations, broad areas where legality is often disputed, not settled. Understanding PSLF: A longstanding public commitment The PSLF programme, created in 2007, was designed to encourage graduates to enter lower-paying but socially vital public sector jobs. It promised that after 10 years of service and 120 qualifying payments, borrowers would have their federal student loan balances wiped clean. For many, the programme was a financial lifeline and a moral pact: serve society, and be relieved of long-term debt. Government employees, healthcare workers, nonprofit staffers, and public defenders have all relied on this structure. More than one million borrowers have already benefited from or are working toward forgiveness under it. What the new proposal changes The Trump administration's revisions would allow the Department of Education to disqualify employers involved in certain 'illegal activities' from being PSLF-eligible. The draft policy includes specific triggers: Aiding or abetting immigration violations, engaging in gender-affirming care for minors (defined as those under 19), or associating with organisations designated as terrorist-affiliated. Importantly, the proposal does not rely strictly on court convictions or legal rulings. It gives the education secretary discretionary power to determine if an organisation's activities fall within the disqualifying scope, even without legal settlements or formal charges. This broad administrative authority has raised alarm among education advocates and legal analysts, who argue that ideological interpretation could replace legal objectivity in defining who qualifies for loan relief. Possible fallout for borrowers and institutions The implications are sweeping. A nonprofit hospital with a single clinic offering gender-affirming care could lose PSLF status for all employees. Cities with sanctuary policies or public schools incorporating diversity and inclusion programmes may be flagged. Workers who have invested years toward loan forgiveness may suddenly find themselves ineligible. Organisations would also be required to annually certify that they are not engaging in prohibited activity. A paperwork oversight or internal legal dispute could put every employee's PSLF status at risk. Critics caution that the proposal could be used to target institutions not for legal misconduct, but for political nonconformity. As a result, entire sectors of the public workforce, especially in healthcare, education, and immigration services, could be destabilised. Workforce strain and legal ambiguity Several members of the rulemaking panel expressed strong concerns about the vagueness and potential overreach of the proposed language. Yet only one negotiator formally opposed the rule, while others supported minor changes in an attempt to temper its impact. Some analysts predict the policy could exacerbate staffing shortages in critical public roles. If borrowers can no longer rely on PSLF, they may abandon essential but low-paying positions in favour of private-sector jobs with better compensation and fewer political risks. Moreover, the lack of clear standards for what constitutes illegal activity creates legal ambiguity. Without a transparent, objective framework, the department's decisions could be challenged in court on grounds of arbitrary enforcement or violation of constitutional protections such as due process and freedom of association. Timeline and public response The Department of Education is currently preparing the final rule for public comment. If adopted, the changes would take effect in July 2026. Until then, the uncertainty looms over borrowers employed by organisations that could be deemed controversial under the new criteria. The agency has stated that its goal is to prevent unlawful use of taxpayer funds and ensure that federal benefits do not support illegal conduct. Nonetheless, opponents argue that the proposal risks punishing lawful employees based on ideological disagreement, not criminal behaviour. A critical moment for public service The PSLF programme has, for over a decade, symbolised a bipartisan commitment to public service. By intertwining eligibility with politically sensitive definitions of legality, the Trump administration's proposed rule threatens to erode that neutrality. This is no mere bureaucratic update—it represents a fundamental shift in how the federal government values and rewards civic labour. If allowed to proceed unchecked, the policy may not just deny borrowers loan forgiveness; it could redefine public service itself. As the public comment period approaches, borrowers, institutions, and civil society groups face a pivotal opportunity to shape the future of a programme that has long been a cornerstone of America's social contract with its public servants. Whether that contract endures—or fractures—may depend on what happens next. Ready to navigate global policies? Secure your overseas future. Get expert guidance now!
