Teachers, nurses, social workers and nonprofit staff who count on federal loan forgiveness have had two stories to follow this year. One is a court fight over who gets to qualify. The other is a processing pileup that has left many people waiting on answers. Both are still unresolved.
The public service loan forgiveness legal ruling
The biggest development is a public service loan forgiveness legal ruling that landed at the last minute. A federal judge struck down the Education Department’s employer eligibility rule on the evening of June 30, hours before it was due to take effect on July 1.
The rule, finalized in late 2025, would have changed who counts as a qualifying employer. It would have let the Education Secretary disqualify organizations found to engage in activities with a “substantial illegal purpose.” Teachers, nurses and nonprofit workers faced losing credit toward forgiveness if their employer was cut from the program. The policy traces back to a March 2025 executive order from President Trump directing the department to revise the criteria.
Two courts weighed in the same day. In Massachusetts, Judge Myong J. Joun issued a 68-page decision vacating the rule as contrary to law, arbitrary and capricious, and a violation of the First Amendment, which also resolved the case brought by 22 states and the District of Columbia. In Washington, Judge Amir H. Ali separately found that the department lacked authority to impose the new restrictions. Judge Joun wrote that Congress clearly set out what counts as an eligible public service job. Judge Ali vacated the rule nationwide rather than limiting relief to the plaintiffs.
For borrowers, the practical effect is simple. The existing definition of a qualifying employer stays in place, and the program continues to run under current regulations.
The fight isn’t over
The administration is not letting it go. The Education Department, through the Justice Department, filed notices of appeal on Aug. 27 in both cases, sending one to the First Circuit and the other to the D.C. Circuit. Because the rule was vacated, it has no effect unless an appeals court revives it. In other words, the legal question stays open, and public service workers should keep watching the appeals.
The public service loan forgiveness backlog
Separate from the court fight, the public service loan forgiveness backlog is a daily frustration for many borrowers. Most of it sits in a specific part of the program called Buyback, which lets borrowers pay to count certain past months of deferment or forbearance toward the 120 payments needed.
The numbers have crept up over the past year. At the end of December, 83,370 Buyback applications were pending, up from 74,510 the previous August. By the end of March, the figure had reached 89,720, with 4,660 new requests coming in and only 3,280 decisions made that month.
The latest report I found, covering April, put the backlog at about 88,000 and noted that the department believes as many as 18,000 to 19,000 of those are duplicate forms, which it plans to weed out. That would shrink the real queue somewhat, though not make it disappear. I could not find a newer court filing than that one, so check the most recent status report before relying on these totals.
Why public service loan forgiveness delays matter
The delays are not just an inconvenience. Based on January’s pace, one analysis estimated it would take roughly 35 months to clear the backlog even if nobody else applied. Some borrowers keep paying while they wait. Others who filed in late 2024 and early 2025 have been making qualifying payments during the delay, which can mean a Buyback is no longer needed by the time a decision arrives.
The Education Department has pushed back on the criticism. A department spokesperson has said the agency is working through the backlog while confirming borrowers have the required 120 payments of qualifying employment, and has blamed the previous administration for how the Buyback program was set up. Critics, including the American Federation of Teachers, have argued in court that the delays are unwarranted and unlawful, and the department’s own staff cuts may have slowed its work. An agreement in that case requires regular status reports and aims to keep eligible applicants from facing a tax bill because of processing delays.
What to know about the public service loan forgiveness application
Many borrowers mix up the different forms, so here is the short version. The official PSLF Help Tool at StudentAid.gov/pslf is how you submit employment certification and apply. The Buyback request is a separate process for people with missing months.
The program itself remains a rare bright spot. One roundup of 2026 forgiveness options said PSLF is the only broad federal program that still cancels balances tax-free, and that it survived the July 1 student loan overhaul intact. More than 1.2 million borrowers had received forgiveness through the program as of January 2026. The rules for newer loans differ, though. CBS News noted that borrowers who took out federal loans on or after July 1, 2026 face different repayment rules under the new framework.
What borrowers can do now
A few practical steps make sense, whatever the courts decide:
- Keep records of your employment certifications, payment history and any confirmation emails.
- Check your employer’s status using the official employer search on StudentAid.gov.
- Submit forms once. Duplicates may make the pile worse.
- Follow the First Circuit and D.C. Circuit appeals if your employer is a nonprofit.
For now, the outlook is a mixed one. Courts have protected the current eligibility rules, but the appeals could reopen that question, and a slow-moving queue means many borrowers will keep waiting.
Disclaimer: This article is for general information only and is not legal, tax or financial advice. Court cases and processing numbers change often, so confirm details with StudentAid.gov or your loan servicer before making decisions about your loans.
