Union sues over stalled public service loan forgiveness
The American Federation of Teachers is seeking class-action status in a lawsuit accusing the Education Department of mishandling applications and removing credit borrowers had earned toward loan cancellation. The union announced the case in Boston, though it was filed in Washington, D.C.
The suit says about 90,000 buyback applications remain unprocessed. The program lets eligible public service workers make retroactive payments for periods when payments on their loans were paused or temporarily suspended, so those months can count toward forgiveness. Borrowers generally qualify for cancellation of their remaining federal loan balance after 120 qualifying monthly payments while working in public service.
The complaint also challenges the removal of previously credited payments. One plaintiff, Donald Knierim, retired after being told he had qualified for forgiveness, then had 15 payments removed, the suit says. Another plaintiff, Jennifer Jessel, owes about $50,000 and says she has been unable to make a buyback payment because her application has not been processed. Other plaintiffs describe waiting more than a year for decisions and continuing to make payments.
The Education Department’s latest status report in a separate case put the pending buyback total at 88,000, while noting that some borrowers submitted multiple requests. The backlog nearly doubled between April 2025 and March 2026. An independent federal oversight agency reported that the department’s workforce declined by at least 40% during the opening three months of 2025. Estimates cited in the case coverage suggest processing the requests could take two to three years at the current pace. The union says the delays violate borrowers’ rights; the lawsuit seeks relief for affected borrowers.
Union challenges loan delays that leave public servants paying
Public servants who have met the terms of a debt relief program should not be left waiting years because the federal government cannot process their paperwork. The American Federation of Teachers is seeking class-action status in a lawsuit filed in Washington, D.C., over delays and removed credits in Public Service Loan Forgiveness.
The complaint says about 90,000 buyback requests remain pending. That option allows workers to make retroactive payments for months in deferment or forbearance and count them toward the 120 payments generally required for forgiveness. A separate department status report put the pending total at 88,000 and said multiple submissions by some borrowers inflated the figure.
The suit also says the department took away credit borrowers had already earned. Donald Knierim, a plaintiff, says 15 payments were rescinded after he was told he had qualified and retired. Jennifer Jessel, who owes about $50,000, says she cannot make a buyback payment because her application remains unprocessed. The delay means workers face continued payments alongside costs such as rent, food and childcare.
An independent federal oversight agency reported that the Education Department’s workforce fell by at least 40% during the first three months of 2025, and the buyback backlog nearly doubled between April 2025 and March 2026. Estimates suggest clearing the requests could take two to three years at the current pace. The lawsuit puts the stakes plainly: workers who fulfilled public service requirements are being denied timely access to the relief the program promises.
Loan forgiveness lawsuit demands answers on federal processing
A new lawsuit over Public Service Loan Forgiveness raises a serious question: whether federal administrators can manage the program reliably while borrowers depend on its rules to make long-term financial decisions. The American Federation of Teachers is seeking class-action status, alleging that the Education Department has stalled applications and removed payment credits.
The suit says roughly 90,000 buyback requests are awaiting action. The buyback option lets eligible public service workers make retroactive payments for months spent in deferment or forbearance, which can count toward the 120 monthly payments generally required for cancellation. The department has said some borrowers filed multiple requests, contributing to the reported backlog.
The case also contests the removal of credit for payments borrowers say they had already earned. The department has attributed some clawbacks to coding errors dating to the Biden administration. One plaintiff, Donald Knierim, says 15 payments were removed after he was told he qualified for forgiveness and retired. Another, Jennifer Jessel, says she cannot submit a buyback payment until her paperwork is processed.
The backlog nearly doubled between April 2025 and March 2026, while an independent federal oversight agency reported that the department’s workforce fell by at least 40% during the opening months of 2025. Estimates put the time to clear pending requests at two to three years at the current pace. The administration says its broader repayment changes are intended to simplify the system and curb excessive borrowing; the lawsuit now asks the court to address the alleged failures in administering this program.
Reported by Business Insider, WBUR.
