Nearly two million federal student loan borrowers who were stuck waiting for lower payment options or loan forgiveness are finally beginning to see some movement.
After months of stalled processing, new developments this month are expected to break the backlog that has kept applicants in limbo.
Why It Matters
More than 40 million Americans currently hold federal student loans, with the total outstanding debt exceeding $1.6 trillion. These balances significantly affect borrowers’ financial lives, influencing their ability to buy homes, manage credit and plan for the future.
The Trump administration’s ongoing restructuring of the Department of Education has coincided with broader political battles over student debt relief. Republican-led legal challenges continue to target initiatives introduced under former President Joe Biden, including contested plans for widespread loan forgiveness.
What To Know
Borrowers pursuing income-driven repayment (IDR) adjustments and Public Service Loan Forgiveness (PSLF) faced logistical and technical problems that, in some cases, left their applications unresolved for nearly a year.
The Department of Education has indicated that processing for pending applications is now resuming, offering hope that affected individuals will receive updates in the coming weeks, Forbes reported.
The issues primarily impacted borrowers who submitted consolidation applications to qualify under the IDR Account Adjustment program or the now-expired Limited PSLF Waiver. Processing these applications had stalled due to operational challenges and limited resources at the Department of Education, but the agency recently indicated that progress is restarting.
The delays had wide-ranging financial consequences for many borrowers, who could not move forward with repayment plans or qualify for loan discharges while their paperwork sat unprocessed. Now that the Department of Education has signaled that the backlog is being addressed, millions of borrowers stand to regain control over their loan trajectories.
“Currently, almost 1.9 million borrowers have been unable to even begin repayment because of a processing pause put in place by the previous administration,” the department said in a statement this week.
For those trying to buy homes, student loan repayment status directly affects mortgage eligibility. As Newsweek previously reported, continued uncertainty around federal loan payments had suppressed potential homebuyers’ access to credit and worsened affordability concerns, particularly for younger Americans.
Separately, updates to how married borrowers’ joint consolidation loans are handled under new rules are expected to further help borrowers access relief, especially for those impacted by domestic violence or divorce.
J. David Ake/Getty Images
What People Are Saying
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “Under the Biden administration, there was an expansion of income-driven repayment options that would help to make monthly payments easier to manage and potentially offer a long-term pathway to loan forgiveness. However, with judicial blockings of the implementation of these plans, it put many borrowers in limbo of not knowing what the future of payments would look like for them.”
Peter Dunn, CEO of Your Money Line, told Newsweek: “Borrowers should brace for ongoing delays. Policy clarity may not come quickly due to the legal challenges and agency reshuffling. Communication will be critical: borrowers should stay informed, document their communications, and take advantage of any available protections or programs.”
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: “The backlog is being addressed through data-sharing between the IRS and the Department of Education, allowing borrowers to import their income directly. That should streamline some of the process, but the full details of the improvements haven’t been shared yet.”
“In my opinion, Trump has made it clear how he feels about these programs, and he’s likely to make it much harder for borrowers to access forgiveness. His past actions suggest a desire to phase out these options and push for full repayment.”
What Happens Next
Borrowers affected by the delays are encouraged to check their loan servicer accounts regularly for updates. The Department of Education has not provided a precise timeline for when all applications will be processed but suggested that significant movement should occur within the coming weeks.
Still, many borrowers could see their payment and forgiveness options more limited under Trump’s administration, Beene said.
“However, with the SAVE plan suspended indefinitely and the new administration making a push to eliminate forgiveness efforts, the future doesn’t look good for those looking for relief in the form of reduced payments or forgiveness,” the financial literacy instructor said.
Thompson echoed this sentiment.
“Borrowers need to understand this: the Trump administration is firm on the idea that if you took out a loan, you need to repay it. Period,” the CEO said.
