The Public Service Loan Forgiveness (PSLF) program was created to provide relief from the student loan debt for those who dedicate their lives to public service. Yet now, it’s more threatened than ever, with a mounting backlog of applications at the Education Department. As of July 31, a staggering 72,730 PSLF Buyback requests remain stuck in limbo. This figure is up from 65,448 applications under review as of the end of June. Borrowers who have spent more than a decade in public service are hung out to dry. They face myriad hurdles that keep them from ever realizing forgiveness on their loans.
The PSLF Buyback program enables borrowers that have 120 months of qualifying public service employment under their belts. They are now eligible to receive retroactive credit for months skipped due to forbearance or deferment. The Biden administration first announced this initiative in the summer of 2023. We believe it will reduce the economic burden on those who’ve spent their careers serving the public good.
The application process poses its own set of challenges. Borrowers will still be required to document their missed payments under the qualifying conditions of public service. As you can imagine, compiling this information is a pretty tedious undertaking. Many borrowers are unaware that they can apply for PSLF Buyback while simultaneously submitting paperwork to switch repayment plans. This dual application possibility may provide some relief for those who need to adjust their repayment strategy amid the ongoing delays.
Ellen Keast, the deputy press secretary at the Education Department, criticized the backlog in May. During that period, the backlog of pending applications came close to 59,000. Since then, the situation has worsened significantly.
“The Department is working its way through this backlog while ensuring that borrowers have submitted the required 120 payments of qualifying employment,” – Ellen Keast
Stephanie Sampedro, a former administrator in the Federal Student Aid office within the Education Department, pointed to staffing issues. She shone a light on the immense challenges that plague the department. She added that there are only one or two full-time staff available right now to process complaints relating to the backlog.
“I think there are only one or two people answering complaints right now,” – Stephanie Sampedro
Borrowers who experience these challenges can attest to the frustration. The snail’s pace of answers and resolution just exacerbates their plight. Sampedro encouraged a different path forward.
“It might be more effective to complain to their congressmembers,” – Stephanie Sampedro
Jaylon Herbin, director of federal campaigns at the Center for Responsible Lending, emphasized the importance of maintaining thorough records throughout this process.
“Keep records of payments, correspondences and account changes.” – Jaylon Herbin
The issues with the PSLF Buyback program are not just a result of its propensity to be a labor intensive undertaking. Nierman, a policy expert in student loan servicing issues, explained that processing these forms takes significant resources.
“The main issue with the PSLF Buyback program is that it is apparently a labor-intensive process to review these forms, and there isn’t a lot of resources dedicated to the program,” – Nierman
He warned that borrowers could experience long delays for answers.
“So it could take a very long time for borrowers to get a response.” – Nierman
In addition to this caveat, Nierman encouraged borrowers not to make the Buyback program their only plan – especially if they have other viable options.
“But if you can afford payments in other repayment plans, don’t rely solely on the Buyback to get you to 120 qualifying payments, particularly if you only need a few months of credit to reach forgiveness,” – Nierman
For borrowers eligible for PSLF Buyback, the Education Department still isn’t processing applications, but they’re still letting borrowers submit applications while they wait on delays. Once approved, borrowers have 90 days to make any necessary payments to their loan servicer after receiving an offer letter. This new flexibility is intended to make sure that the right people actually receive loan forgiveness even with these administrative barriers.
Pioneered during George W. Bush’s presidency, Public Service Loan Forgiveness was created in 2007. It provides an essential avenue for not-for-profit and government employees to have their federal student loans canceled after making 120 qualifying payments over ten years. The program has become an invaluable resource for those determined to make a difference in their communities through public sector work.