• The Trump administration agreed to drop its appeal of a Public Service Loan Forgiveness ruling.
• The ruling blocked Trump's plan to limit PSLF eligibility from taking effect.
• An advocacy group said it's a victory for borrowers pursuing PSLF.

Student-loan borrowers pursuing a major forgiveness program got a rare legal win.

On Wednesday, the Trump administration agreed to drop two of its appeals of a June ruling that had blocked its plan to narrow eligibility for the Public Service Loan Forgiveness program, which forgives student debt for government and nonprofit workers after 10 years.

The Education Department intended to implement a plan on July 1 to exclude employers from PSLF who did not align with the administration's definition of "public service," listing actions like assisting with gender-affirming care or 'acts of terrorism.

A judge ruled at the end of June that the plan was unlawful and would not take effect. This followed a series of lawsuits filed by advocacy groups and nonprofits, including Student Defense, which said the education secretary did not have the authority to roll out those changes.

The administration appealed the ruling at the end of August. With the appeal set to be dismissed, borrowers will not face any immediate changes to PSLF. Another appeal in a separate PSLF lawsuit is still pending.

"The Trump administration's attempt to weaponize public service loan forgiveness against organizations it disagrees with was anti-democratic and unlawful from the start," Dan Zibel, chief counsel at Student Defense, said in a statement. "This is a significant victory for millions of Americans who have dedicated their careers to public service."

The Education Department did not immediately respond to a request for comment from Business Insider.

Undersecretary of Education Nicholas Kent previously said that the rule had been intended to "ensure federal benefits go to our Nation's teachers, first responders, and civil servants who tirelessly serve their communities."

Borrowers pursuing PSLF are still facing challenges. The Education Department recently removed some borrowers' payments toward forgiveness, citing Biden-era coding errors. Others have reported delays getting their payments counted toward relief, leaving them in limbo.

A department spokesperson previously said that the agency "remains committed to ensuring that every qualifying payment is properly credited to a borrower's account."

Have a story to share about student loans? Contact this reporter at asheffey@businessinsider.com.

• Student-loan borrowers are still waiting for the relief they're entitled to through a settlement, a new legal filing said.
• A borrower advocacy group is asking a court to enforce compliance with the relief settlement.
• The Education Department said it disagrees with the motion and is working to enact relief.

Student-loan borrowers are legally entitled to debt relief — but they're still waiting for it to arrive, an advocacy group contends in a new court filing.

The Project on Predatory Student Lending — a borrower advocacy group — filed a new motion in its years-long lawsuit to get relief for thousands of defrauded borrowers.

In July, a federal court denied the Trump administration's request to delay relief under the Sweet v. McMahon settlement, which has provided $23 billion in relief to over 500,000 borrowers. Now, PPSL says that over 1,000 members of the settlement class are still waiting for loan discharges or refunds that the Education Department "was legally required to provide by deadlines that have long since passed."

The group filed a motion asking the court to enforce the settlement and hold the department in contempt, in order to compel compliance with the settlement terms and process relief within the set deadlines. Specifically, the motion asks the department to resume weekly meetings with the plaintiffs' counsel for status updates on the processing of the relief, and asks the court to enforce penalties if the department does not comply.

The Education Department said in its response that the motions are "baseless."

Additionally, a declaration from the department's ombudsman said that borrowers still awaiting refunds are not due to department failure, but rather, that those borrowers' accounts "warranted further review."

"Although it has taken staff some time to understand all of the complexities, the current staff have been reviewing and resolving Sweet complaints since approximately April 2024 with some staff added in 2025," the ombudsman said. "They are all incredibly well-versed in Sweet complaint resolution."

A public hearing in the case is scheduled for November 5.

Student-loan borrowers first filed a lawsuit against the department in 2019, accusing it of failing to process their borrower defense to repayment applications — claims borrowers can file if they believe they were defrauded. If approved, their student debt from the school would be wiped out.

A settlement in the case was reached under the Biden administration in 2022, and while batches of borrowers have received relief, PPSL said that others who qualify are still waiting.

Have a story to share about student loans? Contact this reporter at asheffey@businessinsider.com.

• Student-loan borrowers and parents are facing payment surges, a new report said.
• Borrowers could see an average annual increase of over $2,000 due to Trump's repayment changes.
• The financial strain puts borrowers at greater risk of defaulting on their debt.

A big financial hit could be coming for student-loan borrowers, a new report says.

On Monday, the Center for American Progress, a left-leaning think tank, released a report showing how President Donald Trump's student-loan repayment overhaul will affect bills and relief for millions of borrowers. The think tank shared the report exclusively with Business Insider.

The student-loan changes, signed into law in Trump's "big beautiful" spending legislation, took effect July 1 and included new income-driven repayment plans and borrowing caps. Borrowers moving from the Biden-era SAVE plan to the new Repayment Assistance Plan, or RAP, could see their student-loan bills increase by $2,163 annually on average, the report said.

For example, the report said a typical borrower with a bachelor's degree with earnings of about $68,615 annually would see their monthly payments increase from $136 to $343. That's a total increase of $2,482 annually, on average.

The findings are based on income data from the US Census Bureau's American Community Survey and the Survey of Income and Program Participation, adjusted for inflation using the consumer price index. CAP then estimated how much typical borrowers with different educational circumstances would have to pay under SAVE and RAP based on those plans' rules.

The SAVE plan allowed for lower payments and a shorter timeline to debt relief. The Trump administration eliminated the plan and is requiring borrowers to transition to a new plan, recommending RAP as an option. While the benefits of RAP include waiving unpaid monthly interest, borrowers must make on-time payments — meaning no grace period — to receive them.

Sara Partridge, associate director of higher education at CAP and a coauthor on the report, told Business Insider that while SAVE allowed zero-dollar monthly payments, RAP's minimum payment is $10. "Those $0 payments were a really important protection that many borrowers will struggle without," Partridge said.

For example, per the report, a single borrower without dependents earning $35,000 annually in 2026 would have $0 payments under SAVE. Under RAP, they would owe $88 monthly.

She added that these changes come "at a time when there is high inflation, stagnating wages, and people are generally feeling financially strained," making it more difficult for borrowers to fit a higher monthly bill into their budgets.

Parents and borrowers face increased risk of default

Trump's student-loan repayment overhaul also limits parents' options. Previously, the parent PLUS program allowed parents to borrow up to the full cost of attendance for their kids. Now, parents who took out loans after July 1, 2026, face a lifetime borrowing cap of $65,000. Those new parent borrowers will be limited to the costlier tiered standard repayment plan and will lose access to the income-contingent repayment plan.

Along with higher payments, the repayment overhaul also eliminates all borrowers' ability to defer their loan payments in the event of economic hardship or unemployment, beginning next year.

"This is a tool that borrowers relied on to help them out during times when they were struggling," Partridge said. "And without those options, borrowers may be more likely to become delinquent on their loans or eventually default, which we know can come with some devastating consequences."

Defaulting on federal student loans, which typically occurs after 270 days of nonpayment, can lead to wage garnishment and the seizure of federal benefits, such as Social Security. The most recent data from Federal Student Aid showed that 9.3 million borrowers are in default, with another 1.5 million at risk of defaulting in the next six months.

The Trump administration has said that its changes are intended to simplify a complex repayment system and curb excessive borrowing.

Nicholas Kent, the department's undersecretary, said in a statement that the changes "will ensure students continue to have the access that they need for federal student loans, while helping prevent borrowers from taking on unmanageable debt levels that they may never be able to repay."

Have a story to share about student loans? Contact this reporter at asheffey@businessinsider.com.

Donald Knierim planned his retirement around student-loan forgiveness.

He spent most of his career designing financial data systems for major companies. At the age of 60, he took a pay cut and moved to the public sector, working for Metra, Chicago's commuter railway. His primary draw to the job was lower stress, and an added bonus was that it qualified for the Public Service Loan Forgiveness program, which erases student debt for government and nonprofit workers after 10 years.

Knierim had a $62,000 balance remaining on the student loans he took out to send his kids to college. If all went according to plan, a decade at Metra would wipe that clean.

In November 2025, the now-71-year-old logged on to his Federal Student Aid dashboard. It read "Congratulations! You've satisfied your obligation, and no additional payments are required for this loan." That tracked — Knierim said he had never missed a payment, always verifying that his payments were counting toward his forgiveness progress. So he put in his notice and retired.

Months later, he received an update: 15 payments that had previously counted toward forgiveness were changed to "non-qualifying." The notice said his payments were below the amount required under his income-driven repayment plan, but did not specify the proper amount. That means he has at least another year and a half of payments — about $470 monthly — to achieve PSLF.

"If I have to restore that payment, it's going to put my wife and me in a bad situation," Knierim said. "We're too tight in retirement to be shelling out money for stuff that we can't afford."

Since 2023, Business Insider has heard from student-loan borrowers whose loan forgiveness was rescinded. Over the past few months, issues with PSLF have become more widespread, with borrowers reporting challenges in receiving accurate payment counts. Some had their payments toward forgiveness removed after the Department of Education said it was correcting accounts following Biden-era coding errors.

An Education Department spokesperson said that the agency "remains committed to ensuring that every qualifying payment is properly credited to a borrower's account."

Knierim said that even if he could land a new public service job, he wouldn't be able to take it. Caring for his wife, who is facing serious health issues, is a full-time job. He has reached out to his servicer and filed multiple complaints with Federal Student Aid, requesting his payments to be returned to a qualifying status. Meanwhile, he has not made the new payments his servicer said were due, which has lowered his credit score by more than 200 points. He recently received a notice that his account is delinquent and at risk of default, putting him at risk of seizure of federal benefits, like the Social Security he relies on to stay afloat.

Now, he's asking for the initial communication he received from his student-loan servicer to be honored.

"I thought I was done, they gave me that notification that I was done, and then they clawed it back," Knierim said. "I didn't know where that came from, or what to do."

An error-riddled student-loan forgiveness program

There are a few reasons a borrower might get their PSLF notices rescinded. An internal Education Department memo from 2023, reviewed by Business Insider, said that servicer MOHELA erroneously discharged loans for 64 student-loan borrowers "due to inadequate staff training." The memo recommended that MOHELA send notices to affected borrowers explaining what had happened.

In 2023, one borrower received a notice that his loans had been discharged under PSLF. Nine months later, he received a notice that the forgiveness was a mistake, and his payments were restarted. Between those two notices, the borrower said he had bought a home and paid for his son's preschool. The reversal required him to reconfigure his family's budget.

More recently, the Trump administration removed some PSLF borrowers' qualifying payments, with the Education Department citing Biden-era code errors that "resulted in inaccurate payment counts for some borrowers."

Bonnie Latrielle, an official in the Education Department's Federal Student Aid office under former President Joe Biden, said PSLF errors often arise during communication between the Education Department and servicers; servicers report qualifying PSLF payments to the department, and the department matches that information with a borrower's employment records to determine if the borrower is PSLF eligible.

"Those are all things that are outside of the borrower's control," Latrielle said.

Knierim said his servicer told him that some of the payments he made toward the Temporary Expanded PSLF program — a Biden-era program that allowed payments previously deemed ineligible to count toward forgiveness — did not qualify because they were below the required amount. He said he did not receive any further explanation as to why his payment amounts did not qualify, despite following his servicer's guidance on reaching forgiveness.

"I have a flawless payment history," Knierim said. "I have never missed a payment, and I paid what they told me to pay."

From relief to repayment

The Education Department has a "stated policy of holding borrowers harmless," Latrielle said, and borrowers have the right to submit complaints to the department's ombudsman if they have been harmed by their servicer.

However, amid staffing cuts in the department as part of the Trump administration's plan to dismantle the agency, it has stopped monitoring servicer performance and routine borrower complaints. Latrielle said a growing number of states have student-loan ombudsmen and a borrower bill of rights, offering resources and protections for borrowers within the state. Borrowers can also file lawsuits against their servicer if it violates state law, Latreille said.

Knierim, with the help of his daughter, an attorney, sent a letter to his servicer offering to pay the shortfall in his monthly payments. He said the letter was never acknowledged. He does not want to resume payments or switch repayment plans if doing so could further complicate his progress toward forgiveness. Still, his account is also inching toward default, and finding a resolution is becoming more urgent.

In September, eight state student-loan ombudsman offices, including those from Massachusetts, California, and Illinois, where Knierim lives, sent a letter to the Education Department and congressional leaders calling for stronger oversight of PSLF. They cited an example of a public service worker who had more than the required number of payments for forgiveness, but his progress tracker was reset to zero.

"Borrowers have received no clear explanations for individual reductions, making it difficult to verify the accuracy of the new totals, even though these retroactive adjustments can delay forgiveness by years," the letter said.

Knierim is still searching for clarity on where his student-loan forgiveness stands. He said he recently spoke with a Federal Student Aid representative who told him that a "reconsideration request" for the payment denial is in progress. That process could take up to two months, Knierim said he was told, and in the meantime, he's seeking to put his loans on forbearance until he gets a final answer.

"I kept getting different answers," Knierim said. "I can't go back and work. I have no recourse here."

Have a story to share about student loans? Contact this reporter at asheffey@businessinsider.com.