Loan Relief for Students: A Slow and Uncertain Journey
Pending Applications and Borrower Stress
The Department of Education is currently grappling with a substantial backlog of student loan applications. As of November 30, 802,730 applications for income-driven repayment (IDR) plans remain pending. This delay is causing significant stress for many borrowers.
Recent Approvals and Legal Action
In November, the department approved loan discharges for:
- 170 borrowers on IDR plans
- 280 borrowers under the Public Service Loan Forgiveness (PSLF) program
These discharges followed a lawsuit by the American Federation of Teachers, which accused the department of delaying processing and denying relief.
Uncertain Progress and Borrower Limbo
The department has pledged to address the backlog, but the pace of progress remains unclear. Borrowers are left in limbo, uncertain about when they might receive relief.
Upcoming Changes in 2026
Significant changes are on the horizon for 2026, including:
- New repayment plans
- Borrowing limits
- Changes to PSLF eligibility
However, these changes also introduce uncertainty and potential financial burdens.
Tax Implications and Borrower Concerns
A tax provision that made student-loan forgiveness tax-free is set to expire in January 2026. This means borrowers who reach their payment threshold in 2026 could face significant tax bills. The department has confirmed that borrowers who reached their threshold before 2026 but haven't had their discharge approved will not face taxes.
Many borrowers are anxious about higher payments and the uncertainty of the upcoming changes. Jennifer Oakes, a 41-year-old borrower, expressed her concerns, stating that the lack of clear information is causing stress.
