SEARCH TODAY'S NEWS ARCHIVES

PSLF Buyback Program: A Way to Have SAVE Plan Forbearance Months Counted Towards Loan Forgiveness

Megan Walter, Senior Policy Analyst

With the Saving on a Valuable Education (SAVE) repayment plan still held up in litigation and millions of borrowers in a non-interest accruing payment forbearance, many borrowers enrolled in the Public Service Loan Forgiveness (PSLF) program may be wondering how, and if, these months will be counted towards their 120 payments for forgiveness.

Unlike the forbearance that was put in place during the COVID-19 pandemic, the pause enacted because of the SAVE plan litigation does not automatically count months of non-required-payment towards a borrower’s qualifying payments for PSLF, even if they are otherwise eligible for the program.

While some borrowers may choose to switch to one of the newly reopened income-driven repayment plans, like ICR or PAYE, to start making payments sooner, the time spent in forbearance prior to switching plans, plus the time devoted to the processing of those applications will result in borrowers missing additional repayment months towards PSLF. Switching to one of the other plans now may be the best choice for borrowers whose priority is to pay off their loans more quickly, particularly those early in their careers when their monthly payments under an IDR plan might be the lowest.

For borrowers to have those months in forbearance count toward PSLF, the Department of Education (ED) has created a program called “PSLF Buy Back,” which will allow borrowers, once they reach 120 months of qualified employment in a public service field, to submit a request to ultimately make payments for the months they missed due to the forbearance. While this article focuses on borrowers whose payments were held up due to SAVE litigation, any borrower enrolled in PSLF who missed payments due to deferments or forbearances after 2007 may use the program.

For example, if as of July 2024 –  the date when those enrolled in the SAVE plan were put into a forbearance –  a borrower had made 100 of their required 120 payments, then their 120th payment would be due in February 2026, which is 20 months (or 20 payments) after the forbearance started.

PSLF Buyback Process Example Infographic

For the sake of this article, if we assume that the forbearance continues until at least February 2026, and the borrower remained in forbearance until that time, and had still been employed at an eligible employer, they would then submit a new or updated Employment Certification Form (ECF) to prove their eligible employment. Once the eligible employment is reflected through February 2026 in their studentaid.gov account, they would complete the form requesting “Public Service Loan Forgiveness (PSLF) Reconsideration” following the detailed instructions. As long as the borrower was working for an eligible employer during the month of what would be their qualifying 120th payment, they no longer need to be working for an eligible employer to submit a PSLF buy-back request. In the case that the forbearance ends before the borrower reaches their 120th payment, borrowers should continue to make payments until the review is complete and the buyback is approved. If the borrower ends up paying more than required, ED will issue refunds if necessary.

If approved, the borrower would then receive a buyback agreement with the amount to pay, representing the total of the payments they would have made during forbearance, and instructions to pay the full amount within 90 days. 

The amount that the borrower would have to pay back would be determined one of two ways. If the borrower was in an IDR plan immediately before or after the months they’re “buying back” and the forbearance was less than a year in length, ED will use the lower of the two monthly IDR payments for the months before or after the time in forbearance to calculate the “buyback” amount. For our example borrower, if their monthly payment prior to the forbearance was $250, they would expect to see a “buyback” amount of $5,000 ($250 for each of the 20 months spent in forbearance until they hit 120 payments). For borrowers who had payments in an IDR plan before and after their forbearance, ED would look at the two months of payments before the forbearance started or the two months of payments after the forbearance ended, and take the lowest of payments to make their calculation.

ED does not address how it will calculate the payment amount for forbearances that last longer than a year.

For borrowers who were NOT in a IDR plan before or after the forbearance, ED will request tax information to determine the amount the borrower would have paid under an IDR plan. If the borrower’s forbearance crosses over multiple tax years, borrowers will need to submit their tax information or proof of income for each applicable year. If a borrower was not required to file a tax return for the period of time they are requesting to buy back, they would need to submit certification of non-filing status.

The payment amount used to calculate the “buyback” amount for these borrowers will be based on the lowest IDR amount they would have been eligible for at the time of the deferment or forbearance.

Late last week, ED sent emails to borrowers affected by the SAVE plan forbearance that they are “working to implement the necessary system updates and provider guidance to loan servicers to be able to bill you at an amount required under the court injunction”. The email went on to explain that ED doesn’t expect these updates to be ready until at least September 2025, with first payments due no earlier than December 2025. Because of this delay, ED is directing loan servicers to change IDR plan recertification deadlines, making the first deadline no earlier than February 1, 2026.

Additionally, in the fall of 2024, ED announced that they were working on a process for borrowers enrolled in IDR plans who may be eligible for time-based forgiveness to buy-back some of their months in forbearance. As of the date of this article, there have been no updates on the progress of this program.

 

Publication Date: 1/30/2025


David S | 1/30/2025 10:47:44 AM

Thank you for the very thorough, detailed, well written explanation.

That said, a student loan repayment option shouldn't require a 1000 word explanation. How are borrowers expected to understand and remember all of this, especially when it's only one repayment option out of I've lost count how many? Every other country in the world that offers student loans for postsecondary education wonders why we make this so incredibly complicated.

Kemia H | 1/30/2025 9:32:10 AM

I'm sure everyone saved their monthly payments so that they can afford to buyback.

Sarah B | 1/30/2025 9:20:32 AM

One of the frustrating parts is that borrowers enrolled in REPAYE no longer have that option because it was rolled into SAVE. They are not eligible for PAYE because they have at least one loan borrowed prior to 2007 and are looking at fewer options than before and much higher payments than they have before being driven to SAVE which is surely going to be eliminated. It does not appear that SAVE will revert to REPAYE for many reasons, including political ones.

You must be logged in to comment on this page.

Comments Disclaimer: NASFAA welcomes and encourages readers to comment and engage in respectful conversation about the content posted here. We value thoughtful, polite, and concise comments that reflect a variety of views. Comments are not moderated by NASFAA but are reviewed periodically by staff. Users should not expect real-time responses from NASFAA. To learn more, please view NASFAA’s complete Comments Policy.

Related Content

Today's News for January 30, 2025

MORE | ADD TO FAVORITES

Today's News for January 17, 2025

MORE | ADD TO FAVORITES

VIEW ALL
View Desktop Version