Teachers Union Sues Education Dept Over PSLF Backlogs and Payment Reversals

Key points

• The AFT sued the Department of Education in the U.S. District Court for the District of Columbia, seeking class-action status for affected borrowers.
• A key complaint involves the PSLF Buyback provision, which allows retroactive credit for months in forbearance; the department faces a backlog of approximately 88,000 to 90,000 pending claims.
• Plaintiffs report that the department has reduced their qualifying payment counts without explanation, extending their time to achieve loan forgiveness.
• Education Secretary Linda McMahon’s office stated that the changes are necessary to correct inaccurate payment counts resulting from coding errors made during the Biden administration.
• The lawsuit includes specific cases, such as a speech-language pathologist in New York and a retired worker, who lost credit for payments they had previously made toward forgiveness.

Background

This litigation follows a recent legal defeat for the administration, which abandoned its appeal of a ruling that struck down a proposed PSLF overhaul in late October 2026. That earlier rule would have allowed the department to disqualify employers based on vague criteria. Additionally, the current dispute occurs amid broader changes to student loan repayment plans and the expiration of a tax exemption that made forgiven loans taxable income for millions of borrowers in 2026.

How outlets are covering it

The American Federation of Teachers and its legal counsel, Protect Borrowers, characterize the department’s actions as a 'flagrant' failure to uphold legal rights, arguing that the administration is stalling to avoid fulfilling its obligations. In contrast, the Department of Education defends its position by claiming it is merely correcting 'coding errors' that led to inaccurate payment counts under the previous administration. While the Post and Yahoo emphasize the scale of the backlog and the harm to individual borrowers, CNBC highlights the legal argument that the Biden-era changes were lawful and that the current administration lacks the authority to simply ignore them without a reasoned legal explanation. All sources agree that the department has not provided a detailed public justification for reversing the expanded eligibility or payment credits.

Why it matters

The outcome of this lawsuit could determine whether tens of thousands of public servants receive their promised loan forgiveness or face extended repayment timelines. It also tests the limits of the current administration’s authority to reverse previous policies regarding student debt, potentially setting a precedent for how other federal loan forgiveness programs are administered in the coming years.

What to watch

The case will proceed in federal court, where a judge will determine if the department’s actions constitute a violation of the PSLF program’s rules. Borrowers with pending buyback applications may continue to face delays until the backlog is resolved or a court order is issued. The administration may also issue further statements regarding its legal justification for the payment count adjustments.