US Student Loan System Reveals Split Reality: Applications Move, Forgiveness Stalls
A court-ordered status report from the US Department of Education has exposed a deeply divided landscape for federal student loan borrowers. While income-driven repayment applications are being processed more rapidly, actual loan forgiveness under those same plans has come to a complete standstill. The filing, submitted on February 13, 2026, as part of ongoing litigation over student loan servicing, provides a comprehensive snapshot of loan activity for January 2026. The data indicates clear administrative progress on the front end, yet reveals troubling paralysis at the crucial final stage where borrowers receive relief.
Application Processing Accelerates but Backlog Persists
According to the Department's detailed report, servicers received 260,358 income-driven repayment (IDR) applications between January 1 and January 31, 2026. During that same one-month period, a significant 379,702 IDR applications were decided, with 325,542 approvals and 54,160 denials. This meant decisions outpaced new applications by over 119,000, actively reducing the overall backlog. As of January 31, the number of pending IDR applications stood at 626,412, a notable decrease from 734,221 the previous month.
The Department's filing included a technical note, explaining that monthly totals can be influenced by administrative mechanics. For instance, when a borrower submits a new IDR application while an earlier one is still pending, the earlier request is automatically canceled but not recorded as a formal denial. This adjustment can affect how trends appear in the reported data. Despite the measurable improvement, the reality remains that more than 626,000 pending applications represent a substantial processing burden. For borrowers urgently seeking lower monthly payments, these pending decisions carry immediate and serious financial consequences.
Forgiveness Processing Grinds to a Halt
While application processing showed forward momentum, the critical step of forgiveness under income-driven plans did not. The Department's filing confirms a stark reality: zero loan discharges were processed in January under three key federal plans.
- 0 discharges under Income-Based Repayment (IBR)
- 0 discharges under the original Income Contingent Repayment (ICR)
- 0 discharges under Pay As You Earn (PAYE)
This complete stall occurred despite the Department's own systems identifying thousands of borrowers as eligible for discharge. According to the report, upgraded checks in the National Student Loan Data System flagged in January:
- 10,873 IBR borrowers
- 10,729 original ICR borrowers
- 820 PAYE borrowers
as eligible for forgiveness. Yet, as the Department explicitly stated, "those discharges... did not process in January." This amounts to 22,422 borrowers who were officially flagged as eligible but received no cancellation during the month. The absence of IBR discharges is particularly concerning, as these plans are structured to forgive remaining balances after 20 or 25 years of qualifying payments. The status report provides no explanation for why these identified discharges were not completed.
The PAYE figure also raises significant questions, as no borrower should have yet reached the statutory eligibility period for PAYE forgiveness, suggesting a potential data irregularity. The filing offers no clarification on this point.
PSLF Buyback Backlog Continues to Grow
The report also provides updated data on the Public Service Loan Forgiveness (PSLF) buyback program. This initiative allows certain public service borrowers to make payments to retroactively cover months that would otherwise not count toward their forgiveness timeline. In January 2026, the program saw 5,030 new PSLF buyback applications received, with 2,430 decisions made and 1,980 approvals granted.
As of January 31, a total of 86,520 PSLF buyback applications remained pending, an increase from 83,370 the previous month. At the current decision pace of 2,430 applications per month, clearing the existing backlog would take approximately 35 months—nearly three years—if no new applications were submitted. Given that new requests continue to arrive consistently, the effective wait time for borrowers could stretch even longer. In contrast, 18,160 standard PSLF discharges were processed in January, indicating that the core PSLF program continues to function even as the specialized buyback queue expands.
The Borrower's Reality: A System Operating on Two Speeds
The numbers detailed in the Department's February 13 filing reflect a student loan system operating at two drastically different speeds. Application reviews are demonstrably moving more quickly, providing some administrative relief. Yet the forgiveness processing—the ultimate financial relief that borrowers seek after years or decades of repayment—remains completely stalled under income-driven plans.
More than 626,000 IDR applications are still awaiting a decision. Over 22,000 borrowers were formally identified as eligible for discharge in January alone but received no cancellation. Simultaneously, the growing PSLF buyback backlog suggests potential waits approaching three years under current processing levels. The Department's report provides no timeline for when the identified IDR discharges will finally be processed, nor does it outline any concrete plan to reduce the expanding PSLF buyback backlog.
For borrowers who have met all statutory thresholds after decades of consistent repayment, the distinction between being administratively identified for forgiveness and actually receiving that discharge has become the central, unresolved question. The system's current dichotomy leaves them in a state of financial limbo, with promised relief visible yet frustratingly out of reach.
