Education Department Confirms It Rolled Back PSLF Payment Credits for Some Borrowers

The Education Department has confirmed it is reducing the number of qualifying payments credited to some borrowers in the Public Service Loan Forgiveness program, a move that pushes those borrowers further from having their federal student loans wiped out.

PSLF forgives remaining federal loan balances after a borrower makes 120 qualifying payments, roughly 10 years, while working full time for a government agency or qualifying nonprofit. Losing credited payments means starting that clock over, in part or in whole.

According to Business Insider, a department spokesperson said the Federal Student Aid office "identified multiple PSLF counter code errors stemming from changes implemented in May 2024 under the Biden Administration." The department says those errors produced inaccurate payment counts for some borrowers, and it has now corrected them.

The spokesperson told Business Insider the issue has been resolved and "the vast majority" of affected borrowers have been notified. The department did not say how many borrowers lost credit.

What actually happened is still murky

Forbes, in reporting published Tuesday, laid out the timeline more bluntly: borrowers first started noticing dropped payment counts last week. Customer service reps at Federal Student Aid call centers initially blamed an unspecified "data error." The department has since shifted its story, now saying at least some of the reversals were deliberate corrections rather than accidental glitches.

Forbes' Adam Minsky, an attorney who covers student loans, wrote that the department has not clarified the scope of the rollback and has not said whether any legitimately earned PSLF credit got swept up and removed along with the erroneous entries.

The Student Debt Crisis Center, an advocacy group, went further in an August 7 statement, calling the change a "catastrophic system failure" and accusing the department of failing to disclose the full scope or offer a timeline for restoring credit where it was wrongly removed. That's an advocacy group's characterization, not an independently verified figure, but the underlying fact that the department has withheld a total count of affected borrowers is not in dispute.

Context: a rocky year for federal loan servicing

This isn't happening in isolation. The Biden administration's SAVE repayment plan, which had let some borrowers pay as little as zero dollars a month, was blocked by federal courts after Republican-led states sued, arguing the administration lacked authority to create it. Borrowers were placed in forbearance while the litigation played out, and starting July 1, they began getting notices to switch to a new plan within 90 days or be defaulted into the Standard Plan, according to reporting from The Nation.

The American Federation of Teachers has been warning members since before July 1 that new PSLF restrictions "put years of payments at risk," and is urging borrowers to confirm their repayment plan status directly on StudentAid.gov rather than assume their prior progress is intact.

Business Insider has also reported borrowers receiving incorrect monthly bills and erroneous past-due or default notices unrelated to the PSLF credit issue, suggesting broader servicing strain following the July 1 rollout of Trump's repayment overhaul.

Julie Margetta Morgan, who served as an Education Department official under Biden, said in a statement that "someone needs to stand up for borrowers here," calling on the department to make servicers pay for their own errors and hold Federal Student Aid accountable before any loans are reinstated into repayment.

The fairness question, from both directions

There's a legitimate case that some correction was necessary. If the May 2024 Biden-era servicing change genuinely produced inflated payment counts, as the department says, then those numbers were wrong, and leaving them uncorrected would mean granting forgiveness credit that borrowers didn't actually earn under the law's 120-payment requirement. Taxpayers and the integrity of the program benefit from accurate counts, and the department has a duty to fix known coding errors rather than let bad data stand.

The counterargument, raised by borrower advocates, is that the fix itself appears to be happening with zero transparency: no public accounting of how many people are affected, no clear appeals process, and initial explanations from call-center staff that turned out to be incomplete or wrong. A borrower who was told for months they were on track for forgiveness, then watched years of progress vanish with no explanation, has a real grievance regardless of whether the underlying correction is legally justified.

Separately, Senator Bernie Sanders has introduced the Stop Social Security Garnishment Act, backed by Senators Elizabeth Warren and Ed Markey, which would bar the government from garnishing Social Security benefits to collect defaulted federal student loans. Sanders' office says roughly 9 to 9.5 million borrowers are currently in default and more than 3 million Americans over 62 carry student debt. That bill is expected to be formally introduced when the Senate returns next month and has not been voted on.

For now, borrowers who believe their PSLF payment count dropped incorrectly have no confirmed mechanism from the department to challenge the change beyond contacting their servicer, and no public data exists on how many accounts were altered or how many of those corrections might themselves be wrong.