PSLF Buyback Program: How To Get Student Loan Forgiveness Sooner

The Public Service Loan Forgiveness (PSLF) Buyback program offers forgiveness credits for months when you couldn’t make payments due to forbearance or deferment. This program can expedite your loan forgiveness process by allowing you to make a payment equivalent to what you would have owed on an income-driven repayment (IDR) plan during the missed billing periods. However, it is advisable to wait until the IDR account adjustment program is completed before considering the Buyback program.

For instance, if you were in deferment for three months in 2015, and your monthly payment was $100 at that time, you could potentially owe $300 through the buyback option.

Without utilizing the buyback program, you typically do not earn PSLF credit for months when your student loans were in forbearance or deferment. An exception to this rule is if you were employed in a qualifying public service job during the three-year pandemic payment pause, in which case you still earned forgiveness credit towards PSLF, regardless of missed payments.

The PSLF Buyback was introduced by the Education Department in the fall of 2023 and applies to missed payments dating back to October 2007 when the PSLF program was established.

In mid-August, the department recommended borrowers who reach the 10-year threshold for PSLF during the ongoing SAVE lawsuit forbearance to consider using the PSLF Buyback.

To be eligible for the PSLF Buyback program, you must meet the following criteria:

• You have an outstanding balance on your federal Direct student loans.

• You have worked in a public service job for a minimum of 10 years.

• During the months when you did not receive PSLF credit due to forbearance or deferment, you were employed in a qualifying public service job.

• Purchasing back these months will complete your total of 120 qualifying PSLF payments.

To verify your outstanding loan balance, log in to your studentaid.gov account. The “My Aid” section on your main dashboard will indicate how much you still owe.

Additionally, check if you have eligible past forbearance or deferment periods for the buyback. In the “My Aid” section’s top right corner, click on the “View Details” button, navigate to the “Loan Breakdown” section, select ‘View Loans,’ then “View Loan Details.” Under “Loan Status,” choose “View loan status history.”

Ensure that you have reported all periods of public service employment using the government’s PSLF Help Tool.

To apply for the PSLF Buyback, you must submit an online PSLF reconsideration form. Include the specified wording in your request to ensure it is processed correctly.

If your submission lacks this statement, it will not be considered a PSLF Buyback request.

Following submission, the Education Department will assess your eligibility for the buyback program. If approved, you will receive a buyback agreement via email, outlining the payment amount and instructions for submission. Payment must be made in full within 90 days of receiving the email.

While your application is under review, continue to make any scheduled monthly payments. If your buyback is accepted, you may receive a refund for any overpayments.

The Education Department will compute your buyback bill based on the amount you would have owed during the forbearance or deferment periods.

If you were on an IDR plan before or after the missed payment period, your payment will be equivalent to the lesser of those two monthly bills.

If you were not on an IDR plan before or after the missed payment period, your buyback bill will reflect the minimum student loan payment you could have had at that time based on your income and family size.

• For most borrowers in this scenario, the payment may be based on the most affordable IDR plan available at that time.

• If the standard 10-year repayment plan would have resulted in a lower bill than an IDR plan, you will pay the standard plan amount.

• If you had minimal or zero income at the time and would have qualified for a $0 payment under an IDR plan, no payment will be required for buyback credit.

The government may request previous tax records to determine your payment amount.

During the current forbearance period, you will not automatically accrue PSLF credit, even if you continue making voluntary payments. It remains uncertain if any optional payments made during this time will be retroactively credited towards PSLF once the forbearance ends. The Education Department has not guaranteed a retrospective count of optional payments for PSLF after the forbearance period.

However, the PSLF Buyback is one of the solutions recommended in the latest Education Department guidelines to retroactively earn PSLF credit during the SAVE forbearance. To qualify, you must meet the standard PSLF Buyback requirements and make an additional payment equivalent to what you would have owed under an IDR plan for the months you wish to buy back.

Your second option is to switch to one of the other three IDR plans. Lawsuits do not affect PAYE, Income-Based Repayment, and Income-Contingent Repayment, so enrolled borrowers can still accumulate PSLF credit. However, the online IDR application is currently closed, necessitating a paper application to your servicer. Expect delays in transitioning to the new IDR plan as application processing is temporarily halted.