Written By Adam S. Minsky, JD
Updated on May 21, 2025
Hundreds of thousands of federal student loan borrowers remain stuck in limbo due to a massive backlog in the income-driven repayment (IDR) system. And while borrowers got some marginally good news last week, the situation remains largely unchanged.
For several months, millions of borrowers have been unable to access affordable federal student loan payments under IDR plans due to the Department of Education’s responses to an ongoing legal challenge. Last summer, a federal appeals court issued an injunction blocking the SAVE plan, one of four IDR programs available to borrowers. The court then broadened the injunction in February, which led the department to take down the online and paper IDR applications and suspend processing.
Student loan borrower advocates have argued that this prevented millions of borrowers from accessing affordable repayment plans that they were legally entitled to enroll in, and has also effectively blocked student loan forgiveness under the Public Service Loan Forgiveness (PSLF) program. The Department of Education has countered that the shutdown was necessary so that application systems could be updated to comply with the recent court orders.
Earlier this month, in response to a lawsuit brought by the American Federation of Teachers (AFT), the Department of Education restored the IDR application and resumed processing. But now, loan servicers must work through a significant application backlog. Processing is continuing, but little progress has been made so far, and new problems appear to be arising.
Here’s the latest.
New IDR status report shows nearly 2 million student loan borrowers are still awaiting processing
Last week, the Department of Education filed a formal status report outlining progress so far in processing IDR applications since officials lifted the IDR processing suspension several weeks ago. The status report is part of an interim agreement between the AFT and the Department of Education, whereby the parties agreed to temporarily pause the litigation process to assess the department’s progress in working through the IDR application backlog.
According to the status report:
- The department and its loan servicers successfully processed 79,349 IDR applications during the month of April.
- But 1,985,726 applications remain outstanding, not counting any new IDR applications that were submitted during the month of May.
Processing had only just resumed during the last half of April, so the numbers may understate the department’s true rate of IDR application processing. Nevertheless, the status report was not encouraging for new borrowers, and the AFT was critical of the update.
“It is outrageous and unacceptable that at a time when the Department of Education is being gutted…”
– Randi Weingarten, President, American Federation of Teachers
“It is outrageous and unacceptable that at a time when the Department of Education is being gutted, with its main energy and focus on acting as a debt collection agency, millions of borrowers are being denied their legal right to an affordable repayment option,” said AFT President Randi Weingarten in a statement last week.
“It is all the more concerning that until their applications are processed, these borrowers are being denied credit toward debt cancellation under the PSLF program. Even if borrowers can eventually buy back this time, that adds another cumbersome step to a process that is already notoriously bureaucratic. This is the opposite of government efficiency. The AFT brought this lawsuit to stand up for its members’ legal rights. We will continue to fight to ensure that these rights are not impeded by tedious bureaucracy and poor program administration.”
The Department of Education will file another status report in mid-June, which may more accurately reflect the true rate of IDR application processing. The department had indicated in an earlier court filing that IDR processing would not be in full swing until May 10.
PSLF Buyback also has a major backlog, leaving student loan borrowers in limbo
The same status report also contained new information on the PSLF Buyback program. This is a new Biden-era option that allows borrowers pursuing student loan forgiveness based on public service employment to “buy back” the time associated with a non-qualifying deferment or forbearance period. Typically, these periods have not counted toward PSLF.
“You can buy back months that don’t count as qualifying payments because you were in an ineligible deferment or forbearance status,” says Department of Education guidance on PSLF Buyback. “You can buy back these months only if you still have an outstanding balance on your loan(s), you have approved qualifying employment for these same months, and buying back these months will complete your total of 120 qualifying PSLF payments.”
Eight million borrowers have been stuck in the SAVE plan forbearance, which doesn’t count toward student loan forgiveness for either IDR plans or PSLF, since last summer. Many of these borrowers have been applying for PSLF Buyback, particularly those who are nearing the threshold for loan forgiveness, so that the period can ultimately still count toward PSLF. But while borrowers typically receive automated notices that the Department of Education will issue a PSLF Buyback determination within 90 days, many have been waiting for far longer, with no clear updates.
The Department of Education’s status report issued last week confirmed that the vast majority of PSLF Buyback applications remain unprocessed. During the month of April:
- The department processed 1,472 PSLF Buyback applications.
- But 49,318 applications remain outstanding.
The department… provided no explanation for the ongoing processing delays.
The department confirmed in its filing that the SAVE plan forbearance period is eligible for PSLF Buyback, but it provided no explanation for the ongoing processing delays, nor was there any indication that processing would ramp up soon.
Student loan borrowers encountering problems enrolling in the PAYE plan
Meanwhile, while IDR processing should be fully up and running despite the backlog, student loan borrowers are encountering some new problems with the online IDR application.
The Department of Education indicated quite clearly in March, after the online IDR application had been restored, that borrowers are now free to enroll in the Income-Contingent Repayment (ICR), Income-Based Repayment (IBR), and Pay As You Earn (PAYE) plans. The SAVE plan, which is the subject of an ongoing legal challenge, remains blocked due to a court order and is, therefore, unavailable.
“As of March 26, 2025, the online IDR application is once again available for eligible borrowers to apply for the Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR) Plans,” says updated Department of Education guidance. “Borrowers who enrolled in or applied for the SAVE Plan remain in forbearance, unless they obtained a different status.”
But some federal student loan borrowers are reporting that they are unable to enroll in the PAYE plan. Not everyone is eligible for PAYE, as the program has restrictions based on a borrower’s loan disbursement dates. But even eligible borrowers seemingly are unable to select the PAYE plan in the online application, potentially cutting off a route to more affordable payments, as typically IBR and ICR are more expensive income-driven repayment options.
The Department of Education has not offered any explanation, and its recently filed status report does not break down approvals among the specific IDR plans.
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