Student loan backlog hits 643,000 as SAVE plan ends and millions must switch repayment plans
New data released by the U.S. Department of Education shows that more than 643,000 student loan borrowers are still waiting on applications for repayment plans and loan forgiveness. While this represents an improvement from prior peaks, the backlog remains substantial and highlights persistent administrative challenges. The delays come at a critical moment, as millions of borrowers prepare to transition to new repayment options.
The backlog data stems from an interim agreement tied to litigation over processing delays affecting income-driven repayment (IDR) plans and Public Service Loan Forgiveness (PSLF). These programs are central to the federal student loan system, offering borrowers pathways to affordable payments and eventual debt cancellation. However, the system’s ability to process applications efficiently has lagged behind demand for more than a year.
Income-driven repayment plans remain essential but delayed
IDR plans cap monthly payments based on a borrower’s income and offer forgiveness after 20 or 25 years. Despite their importance, nearly 553,966 applications remained pending as of the end of March. Although this is down from nearly 2 million a year earlier, progress has slowed, with only modest month-to-month improvements.
The Department of Education reported receiving 321,481 new IDR applications in March, a sharp increase from 243,258 the previous month. This spike may signal the beginning of a larger wave as borrowers react to upcoming policy changes. Increased demand is already offsetting gains made in reducing the backlog.
SAVE plan termination could trigger massive shifts
A key driver of the surge is the planned termination of the SAVE (Saving on a Valuable Education) repayment plan created by President Biden. Borrowers currently enrolled; estimated at more than seven million; must switch to a different repayment plan within 90 days after the plan was finally terminated by courts. Those who fail to act risk being placed into standard repayment plans with significantly higher monthly payments.
PSLF buyback backlog continues to worsen
The backlog for PSLF Buyback applications has grown to 89,720, up from 88,170 the previous month. This program allows borrowers to retroactively count certain deferment or forbearance periods toward forgiveness by making a lump-sum payment. However, the Department is processing fewer applications than it receives, causing the backlog to steadily increase.
Many applicants have already waited over a year for decisions on PSLF Buyback requests. The Department of Education acknowledged the delays, stating, “It is not uncommon for requests to take many months, and submitting duplicate requests or contacting your loan servicer will not speed up the process.” Officials also noted there is currently “no estimated timeline” for processing due to high application volumes.
Recent updates to the PSLF Buyback program could make forgiveness more expensive. The Department announced it will no longer use the SAVE plan formula to calculate buyback amounts, instead relying on other IDR formulas. This shift is expected to raise costs for borrowers attempting to retroactively qualify for forgiveness.
New repayment plan rollout adds further complexity
At the same time, the Department is preparing to launch a new Repayment Assistance Plan (RAP). While RAP may offer more affordability than some existing plans, it is generally expected to be more expensive than SAVE. The rollout of RAP alongside the phase-out of SAVE raises concerns about whether loan servicers can manage both transitions effectively.
With SAVE ending and RAP launching, millions of borrowers will need to submit new applications in a short timeframe. Advocacy groups warn that the system is not prepared for such volume. If processing capacity does not improve, existing backlogs could expand significantly, delaying access to affordable payments and forgiveness.
Faster processing is improving; but not fast enough
There are signs of improvement. The IDR backlog has dropped significantly from its peak, and some borrowers can now transition plans quickly if they allow automatic income verification through the IRS. Still, these efficiencies are not yet widespread enough to offset the broader surge in demand.
For many borrowers, delays in processing have real financial consequences. The Department of Education advises borrowers to continue making payments while applications are pending, but this can strain budgets and reduce the ability to save for emergencies or retirement. At the same time, borrowers eligible for forgiveness remain in limbo, uncertain when relief will arrive.
As major repayment changes take effect this summer, the student loan system faces a critical test. Without significant improvements in processing capacity, the combination of policy shifts and surging applications could deepen delays, leaving hundreds of thousands; if not millions; of borrowers waiting for relief.
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14 essential strategies to maximize your Social Security and avoid costly mistakes
Social Security is a vital lifeline for many seniors, providing crucial income support during retirement. With inflation at its highest in four decades, Social Security’s inflation-adjusted benefits offer protection against rising costs.
Rising interest rates have disrupted many retirement portfolios, causing bond fund values to plummet. In this volatile financial landscape, Social Security can stabilize a typical stock-bond retirement portfolio. By implementing smart strategies, retirees can maximize their Social Security benefits and ensure a more secure financial future.
14 Essential Strategies to Maximize Your Social Security and Avoid Costly Mistakes
11 reasons you should claim Social Security early
Deciding when to claim Social Security is often about maximizing your benefit. Financial planners usually advise delaying your claim for as long as possible to secure the highest monthly payment. Your benefit is based on your lifetime earnings, with a full payout available at your full retirement age (FRA), which is currently between 66 and 67 depending on your birth year. Claiming before FRA results in a permanent reduction in your monthly benefit, while waiting beyond FRA leads to a permanent increase. However, the decision isn’t solely about maximizing the monthly check. Personal factors such as health, family circumstances, and financial needs can play a significant role in determining the right time to claim.
11 Reasons You Should Claim Social Security Early
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John Dealbreuin came from a third world country to the US with only $1,000 not knowing anyone; guided by an immigrant dream. In 12 years, he achieved his retirement number.
He started Financial Freedom Countdown to help everyone think differently about their financial challenges and live their best lives. John resides in the San Francisco Bay Area enjoying nature trails and weight training.
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