Litigation aims to force the Trump administration to stop postponing student loan forgiveness
“Congress designed these [plans] To ensure that borrowers repay loans, the Biden administration has tried to illegally force taxpayers into the bill. Education Secretary Linda McMahon said in a July statement.
McMahon refers to an income-driven repayment plan created by the Biden Administration, which is so generous that the court forced the department to put the plan on the ice, leaving most of the loan plans in trouble.
The Education Department has used legal uncertainty around preservation to justify the suspension of cancellation under ICR, PAYE and IBR.
The IBR was created by Congress and was not legally challenged. But the department told NPR in July that questions about Save’s legality make it difficult to determine the eligibility for cancellation under the IBR. As a result, many borrowers who may be eligible for cancellation will still have to pay.
“For any borrower who pays after eligibility for forgiveness, the department will refund the money when the recovery resumes,” the department told NPR in a statement this week. As for when?
The department will not bear the timeline: “Once the department can determine the correct payment count, IBR emissions will be restored immediately.”
PSLF trouble
Borrowers participating in Public Service Loan Forgiveness (PSLF) also experienced delays. By the end of last month, the department had applied for nearly 75,000 cancellation applications under the backlog of the PSLF “buyback” program, according to court records. This allows borrowers with 10 years of proven public services to make qualified payments in months of endurance or deferment.
The stern said that from May to August, the department received far exceeding the processing. Each month, the department receives an average of 9,902 new applications, but handles an average of 3,604. ”
In a statement, Ellen Keast, deputy press secretary of the Ministry of Education, said that in the PSLF “buyback” program, the Biden administration was guilty of “release of planned weapons for political purposes for law.”
Processing these buyback applications can be time-consuming, and the Trump administration’s move to cut the federal student aid staff office in half may slow its efforts.
On January 1, 2026, tax changes will not apply to public service loan forgiveness.
Many borrowers are at risk of default
More than 7 million borrowers are included in savings and do not require payment, but the Trump administration has recently restored interest on those loans in hopes of pushing borrowers to alternative programs.
But court records show that the admission time for alternatives has been slow for several months. In February, the ministry temporarily stopped accepting applications for all income-dependent repayment plans, and although it has resumed, more than one million dollars are still waiting as of the end of August.
The education department’s KEAST told NPR that the backlog started during the last administration, which “is actively working with federal student loan providers and hopes to clear Biden Backlog in the coming months.”
Amid all this confusion and uncertainty, the data suggests that many federal student loan borrowers have failed to repay their loans.
“Two-thirds of federal student loan borrowers currently paying for loans are at some stage of default,” said Daniel Mangrum, a research economist at the Federal Reserve Bank of New York.
This means millions of borrowers now have a serious risk of default.
