Teachers union sues Education Department over stalled student loan forgiveness buybacks

The American Federation of Teachers and nine borrowers have filed a proposed class action accusing the Education Department of stalling Public Service Loan Forgiveness decisions and stripping credit borrowers had earned toward forgiveness. The suit, filed Friday in federal court in Washington, centers on the PSLF "buyback" option, which lets borrowers pay for months spent in certain forbearances so those months count toward the 120 qualifying payments needed for forgiveness. The complaint cites department reports showing pending buyback applications rose from 49,318 in April 2025 to 89,720 in March 2026, and the union says more than 90,000 borrowers are affected. It also says some borrowers' payment counts dropped in August, in some cases by 15 months or more. The department told news outlets it was correcting "coding errors" made under the Biden administration and had notified most affected borrowers.

Why it matters: PSLF cancels the remaining federal student loan balance for public service workers such as teachers and nurses after 120 qualifying payments. Borrowers waiting on buyback decisions keep making monthly payments in the meantime, and the suit asks the court to order the department to meet its obligations under the program.