The federal government has been making a promise to millions of student loan borrowers for years: Stay on your repayment plan long enough, and your remaining balance will eventually disappear.
For more than half a million people, that promise is still just words on a government website, not money back in their monthly budget.
A new court filing submitted on March 16 by the Department of Education reveals that the backlog of income-driven repayment applications has fallen sharply. The number dropped to 576,609 pending applications as of Feb. 28, 2026, according to the filing in American Federation of Teachers v. U.S. Department of Education.
That is the lowest figure reported since court-ordered tracking began, down from a peak of nearly two million applications in April 2025.
The progress sounds encouraging until you look at the fine print, which tells a troubling story for your finances.
No one gets relief, despite more income-driven repayment applications processed
The Education Department processed 329,169 IDR applications in February while receiving only 243,258 new ones, according to the court filing. That means the agency cleared roughly 85,000 more applications than it received, a pace that has steadily reduced the queue.
Of those 329,169 decisions, the Department approved 296,118 applications and denied 33,051, according to the filing reported by CNBC. The approval rate of roughly 90% suggests most borrowers who applied did qualify for an affordable repayment plan under existing rules.
The troubling part is what happened after those approvals landed. The Department reported zero IDR loan discharges during the entire month of February 2026.
That is the second consecutive month with no relief granted under Income-Based Repayment, Income-Contingent Repayment, or Pay As You Earn plans.
Why zero student loan relief happened two months in a row
The Department runs discharge eligibility checks through the National Student Loan Data Service every other month, not on a rolling daily basis. The most recent eligibility check occurred in January, and those discharges were processed in early March, according to The College Investor.
That means the February data captures a gap between eligibility batches rather than a deliberate decision to halt forgiveness across the board. The next batch is scheduled for later in March, after this particular status report’s filing date.
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If you have been making qualifying IDR payments for 20 or 25 years and expected a discharge in February, you may have already received it in early March from that January batch.
You should log into StudentAid.gov and check your account status directly rather than relying on monthly status reports that lag behind actual processing.
The PSLF buyback queue keeps growing while IDR applications clear
The income-driven repayment backlog is moving in the right direction, but the Public Service Loan Forgiveness buyback program is heading the opposite way. The PSLF buyback backlog grew to 88,170 pending applications as of February 28, up from 86,520 the previous month and 83,370 in December, according to the filing reported by NASFAA.
During February, the Department received 4,180 new PSLF buyback applications but decided on only 2,520 of those cases. The underlying math, though, is less encouraging, since the queue grows by roughly 1,660 applications every single month.
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At the current processing rate, with no additional applications submitted, clearing the buyback backlog would take nearly three years, higher education expert Mark Kantrowitz told CNBC.
Public servants such as teachers, nurses, and firefighters are the borrowers most affected by this growing queue.
The buyback option lets you retroactively pay for months of forbearance or deferment that did not count toward your 120 qualifying PSLF payments.
If you spent months in the SAVE plan forbearance, those months did not count toward PSLF, and the buyback program is the only mechanism to recover that lost progress.
Carlos Barquero/Getty Images
Seven million SAVE borrowers could flood the application system next
The IDR backlog decline is real, but the relief may be short-lived because a massive wave of new applications is on the horizon. More than 7 million borrowers remain enrolled in the now-defunct Saving on a Valuable Education plan, according to the U.S. Department of Education.
Those borrowers have been in administrative forbearance since mid-2024 and must now switch to a new repayment plan.
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Carolina Rodriguez, director of the Education Debt Consumer Assistance Program in New York, told CNBC that the backlog for relief programs could worsen significantly as SAVE borrowers begin submitting applications to access a different income-driven repayment plan.
The 8th Circuit Court of Appeals ordered the permanent end of the SAVE plan on March 10, 2026. Interest has been accruing on those loans since August 1, 2025. The Department of Education has not yet provided a clear timeline or deadline for when SAVE borrowers must complete their transition to a new plan.
Your options if you are currently enrolled in SAVE:
- Go to StudentAid.gov/idr and file an IDR application selecting Income-Based Repayment, the most widely available plan right now.
- Do not select “have my loan servicer select my plan” or “lowest monthly payment amount” because those options may not be processed.
- If you have Parent PLUS loans, consolidate them into a Direct Consolidation Loan before July 1, 2026, because after that date, you lose IDR access entirely.
- Use the Federal Student Aid Loan Simulator tool at StudentAid.gov to estimate payments under each available plan before making your decision.
Student loan forgiveness now triggers a federal tax bill
There is another financial surprise for which many borrowers have not prepared, and it could cost you thousands of dollars at tax time next year.
As of Jan. 1, 2026, student loan debt forgiven through income-driven repayment plans is once again treated as taxable income at the federal level.
The American Rescue Plan Act of 2021 temporarily shielded student loan forgiveness from federal taxes, but that provision expired on December 31, 2025. Trump’s One Big Beautiful Bill Act, signed in July 2025, did not extend or renew that protection for borrowers who receive forgiveness going forward.
More than 12 million student loan borrowers are enrolled in IDR plans, according to Kantrowitz. The average loan balance for borrowers on an IDR plan is around $57,000, he told CNBC. If you are in the 22% tax bracket and have $57,000 forgiven, you could face a federal tax bill of more than $12,000.
Lower earners in the 12% bracket would still owe about $7,000 on a forgiven balance of that size. You should talk with a tax professional now about whether to adjust your withholding or begin setting aside money for a potential bill in April 2027.
One important exception to keep in mind
A recent settlement between the American Federation of Teachers and the Trump administration made some clarifications. The settlement states that borrowers who became eligible for forgiveness in 2025 will not owe federal taxes on the relief.
That applies even if the actual discharge was not processed until 2026, according to Nancy Nierman of the Education Debt Consumer Assistance Program, CNBC reported. If you received confirmation of eligibility in 2025, save that dated record as proof.
Less government oversight of student loan servicers makes your vigilance essential
The Government Accountability Office reported on March 12 that the Department of Education stopped assessing student loan servicers on accuracy and call quality in February 2025, according to a CNBC report on the GAO findings.
That change occurred shortly before the Trump administration reduced the Federal Student Aid Office’s staff from 1,433 to 777.
Without those assessments, the GAO wrote, the Department cannot confirm that your loan records are correct or that servicers are giving you quality information.
Kantrowitz warned that borrowers may choose the wrong repayment plan, miss eligibility for forgiveness, or even default because of poor servicer guidance.
Steps student loan borrowers can take to protect themselves
- Log in to StudentAid.gov and verify your loan balances, repayment plan enrollment, servicer assignment, and payment count toward forgiveness.
- Download or screenshot your payment confirmations every month so you have independent evidence if your servicer makes a billing error.
- If your servicer provides incorrect information or mishandles your account, file a complaint with the Consumer Financial Protection Bureau online.
- Do not pay any third-party company that promises to speed up your forgiveness or process your applications faster than the government will.
- Every resource you need is available for free at StudentAid.gov, and the Institute of Student Loan Advisors also provides free, unbiased guidance.
The bigger picture for your household budget in 2026
More than 42 million Americans hold federal student loans, and the outstanding debt exceeds $1.6 trillion, according to the Congressional Research Service. The combination of a shrinking IDR backlog, a growing PSLF buyback queue, and zero monthly forgiveness discharges creates a confusing landscape for borrowers.
Beginning July 1, 2026, borrowers will also have access to the Repayment Assistance Plan, the Trump administration’s replacement for SAVE under the One Big Beautiful Bill Act. Monthly payments under RAP will range from 1% to 10% of your adjusted gross income, with loan forgiveness available after 30 years rather than 20 or 25.
Several existing IDR plans, including Pay As You Earn and Income-Contingent Repayment, will be phased out entirely by July 2028. If you are currently enrolled in either of those plans, you will need to transition before that deadline or risk being placed on the standard repayment plan, which could mean significantly higher monthly payments.
The bottom line is that the federal student loan system is undergoing more changes at once than at any point in recent years.
Your best protection is staying informed, checking your records regularly, and making active decisions about your repayment plan rather than waiting for the Department of Education to tell you what to do.
Related: SAVE Plan ends with bad news for student loan borrowers
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