[EDITOR'S NOTE: The SAVE legal forbearance months can be rectified using the PSLF Buyback program.]
Back in October 2022, news dropped that shocked the student loan world. The Department of Education (ED) and the Biden Administration rolled out wholesale changes to student loans' crowning jewel, Public Service Loan Forgiveness (PSLF). As part of the changes enacted, there was a subtle and little-known program called a hold harmless option. The ED was very hush-hush on this with bigger initiatives such as the PSLF waiver, the one-time account adjustment, and the student loan pause expiring.
A hold harmless option was initially discussed as a means to have previous periods of forbearance and deferment counted toward PSLF as qualifying months. In addition, the ED would consider months when income was low enough for $0 payments to be credited as well. A number of student loan pause-era waiver programs granted borrowers forgiveness credits for times that would not normally qualify, as well. But these have a finality with the last of the waivers expiring on June 30, 2024. Here's what you need to know if you're unfamiliar with the IDR waiver and impending deadline.
Recently, a hold harmless option was rebranded as the Public Service Loan Forgiveness Buyback or PSLF Buyback program. The program can be utilized to help alleviate some of PSLF's issues—such as your servicer placing you into an unwanted forbearance, the handful of months you missed after switching repayment plans, or even payments missed during economic hardship.
Quick Refresher on the Public Service Loan Forgiveness Program
The PSLF program requires a borrower to work for a decade in public service. After the decade, the borrower can qualify to have their outstanding student loan balance forgiven tax-free. A borrower needs to meet these four criteria to qualify for PSLF:
- Employed directly by a nonprofit/501(c)(3) (except for California and Texas physicians) for
- a minimum of 30 hours per week
- in an income-driven repayment plan—such as SAVE, PAYE, IBR, or ICR—and
- have direct federal student loans.
If you're missing any of these four steps, you don't qualify for PSLF.
Why Public Service Loan Forgiveness Buyback?
Implementation challenges and mismanagement by the ED and student loan servicers have plagued the PSLF program. Many borrowers have faced unexpected denials—often due to administrative errors, subpar answers from student loan servicers, or a misunderstanding of program requirements. The complex eligibility criteria and lack of transparency have left countless public servants frustrated and wondering if they'll ever qualify. Although there are now more than 750,000 borrowers (as of December 2023) who've reached PSLF, there is more to be done to improve this process.
In response to the frustrations surrounding PSLF, the concept of a PSLF buyback has gained traction. Essentially, a PSLF buyback would allow borrowers to receive retroactive credit for periods of deferment and forbearance. Deferment and forbearance were never counted as credit toward the 120 payment requirement, aside from the recent waivers. This option aims to provide relief to borrowers who have experienced mistakes brought on by their servicers, and it's a chance to have their loans wiped out earlier.
More information here:
The (Nearly) Perfect PSLF Situation for a Physician
7 Major Changes to Public Service Loan Forgiveness
How Does PSLF Buyback Work?
To qualify for the PSLF Buyback program, you need
- An outstanding student loan balance
- A decade of employment in public service
- Direct federal student loans and
- Certified employment for the periods of deferment and forbearance you'd like captured by PSLF Buyback
To apply, fill out the PSLF Reconsideration Application.
Select the PSLF Buyback Option.
If you're deemed eligible for PSLF buyback, you'll receive an agreement to pay a specified amount for the months that now would count for you. The payment is due within 90 days of the letter you receive.
The buyback amount is determined based on what you would have paid on your IDR plan. You may be required to send tax information for those calendar years to calculate the amount you would have paid in IDR. Dig up those old W2s, tax returns, etc., because they may come in handy. If you weren't required to file taxes back then, you'll need to send some other income statement, if possible. If you were in an IDR before or after your forbearance/deferment, they can use that payment as a reference.
Now for an example. You applied for PSLF buyback for 12 months, July 2018-June 2019. Back then, you were single and making $100,000. Monthly payments in SAVE at that income and household size were ~$550. A year of payments was $6,600. For you to qualify, you'd have to pay $6,600 within 90 days.
What if you didn't apply for PSLF buyback and had another year to go?
Now you're married and making $300,000 per year. You have 12 months remaining until you reach your 120 payments. Monthly payments are $2,200 per month. That's $26,400 for a year. You would save ~$20,000 in student loan payments ($26,400 – $6,600) and be out of debt 12 months sooner if you apply for PSLF buyback! That's a win-win.
We can't think of many scenarios when you should not apply for PSLF buyback, as forbearance and deferment tend to occur during times of economic hardship, lower income, or negligence by your loan servicer. It's usually a no-brainer to apply if you're eligible.
While you're waiting for your PSLF buyback application to be reviewed, continue making payments. If you're deemed eligible for the buyback months, the additional months you've paid while in review will be reimbursed to you when you receive your forgiveness notice.
It's a nice feeling when you see $700,000 of student loans discharged (our record we've seen forgiven at StudentLoanAdvice.com) and a $1,200 check coming back to you.
What Time Period Qualifies for PSLF Buyback?
The months eligible for PSLF buyback are available when you were working at a qualifying employer with direct loans while your loans were in either forbearance or deferment. The SAVE forbearance time is currently eligible for PSLF Buyback.
You cannot buy back months that were
- in-school,
- during a grace period,
- in default,
- in bankruptcy, or
- had total and permanent disability
Please note: You also can't buy back any months on loans that are not direct, included in a consolidation, or already paid off. So, if you've consolidated your loans in the past, note that you can't buy back months prior to consolidation.
How to Find Out If You Have Months Eligible for PSLF Buyback?
Determining if you have months eligible for PSLF buyback is a crucial step. Here's a step-by-step process
- Log in to your student aid account.
- Once logged in, you will see your dashboard and PSLF Payments (if you previously certified employment).
- Click “view details” and look into your payment history
- Find months that are marked as “ineligible”
- Ineligible months could potentially be recharacterized as PSLF credit through Buyback
More information here:
Capitalizing on SAVE: Loan Repayment Strategies for Students and Residents
How to Ensure Student Loan Forgiveness Through the PSLF Program
When Is PSLF Buyback Available?
The PSLF Buyback Program is available now. If you meet criteria you should apply to shorten your time to PSLF!
Do you need help applying for PSLF Buyback or determining when to recertify income, or are you confused about your overall student loan plan? Hire one of our in-house student loan pros at StudentLoanAdvice.com to help you figure it out.
What do you think? Will you apply for PSLF Buyback? Why or why not? How much money and how many headaches would this new program save you?
Do you have to pay taxes on the amount of the loan that has been forgiven?
PSLF no. IDR forgivceness yes.
And I’d add that IDR forgiveness is not taxable until 2026. This was made possible by the Tax Cuts and Job Act of 2017. This ruling is temporary and sunsets in 2026.
Andrew SLA
For those of us who recertified in the last month or two, had our payments go up, are now awaiting our loan servicer to revert back to the lower payment (unclear on how long this will take), and have a payment due soon, should we 1. not pay and incur a delinquency but hope it gets fixed/removed down the line AND still counts toward PSLF, or 2. pay and request a refund later?
I would still make your payment and call your servicer to have them lower your payment. It should still count towards PSLF.
Andrew SLA
Hi, I have 8 more payments left until I hit 120 payments. I have 4 payments that were not counted due to forberance and hoping to submit buyback which would bring the total payments down to 4 (8-4). One of the eligibility criteria is I need to have 120 payments eligible. Question is why would I make all 120 payments and then pay extra for 4 buyback payments ? In such scenario I would be looking for refund? Am I interpreting this correctly?
Or can I submit buyback request now but I may get denied..
Thanks for the help!
DP,
You need to wait 8 months then apply for PSLF buyback. You shouldn’t apply until you’ve reached 120 qualifying months not including the potential buyback months. There should be some sort of a refund if you qualify.
Andrew SLA
Andrew,
My IDR recertification date is still listed as 3/27/2024 on the MOHELA site. Although it’s my understanding that I won’t be required to recertify until at least September, it makes me nervous to let my date pass without doing anything, and risk being put onto the standard plan and/or off PSLF-qualifying IDR. What would you recommend doing in this scenario?
Thanks!
Travis
Travis,
Call your servicer and request they move it back a year.
Andrew SLA
I was asked to recertify with my due date being in March. So I basically recertified my income in February using the self certifying feature thinking that it was much straightforward. My payment went from 0 to more than 500. Then the government released this communication delaying the recertification date. I call the business next day. I spent 50 minutes, the lady that answered my call did not want to help me, her argument was that March was my “soft due date” and that April was my “hard due date”, so this did not apply to my situation which is completely wrong. Anyway, I called again the next day and in 9 minutes this other lady submitted a request for my payment to go back to 0. I’m still waiting for a response from MOHELA. Anything else you think I should do? Thank you.
Sounds like you did the right thing to me.
For those of us who have already paid off our federal student loans but would have qualified for PSLF, is this strategy worth trying?
I can sense what the dollar amounts we are talking about and it seems to be worth the effort.
Altadoc,
Unfortunately no. Here’s the guidance from the Dept of Ed website
Andrew SLA
Hello.
I read about the PSLF Buyback in February. I submitted all information as per the FSA.gov guidelines. Since it had been a month that I applied and still had not received any update, I attempted to “chat” with FSA.gov. They said they had no information about the program and to contact my servicer Mohela. Mohela said they had no information and that requests should be through the US Department of Education. There are 3 different phone numbers on their website and for each one I call I am on perpetual hold. Is there any information on how long it takes to receive a response or who to call for an application status update?
Thanks
A. Todd,
In my experience the Dept of Ed or MOHELA usually take 2+ months to process really any request. So i’m not surprised you have yet to see an update. I think when submit your PSLF Reconsideration request it creates a ticket in studentaid.gov in your My Activity. It should give you an idea there if it is still “in progress” or “completed”.
If you haven’t heard an update by the end of the month, you may have to try to call them during a time when the wait times are shorter.
Andrew SLA
Question about those of us who recently re-consolodated our private loans to Direct Federal Loans, so that we could become eligible for PSLF:
I know the deadline to re-consolidate is April 30th. I did mine about a week ago. However, it takes 6 weeks or so to process, according to the Education Dept.
When should I fill out the PSLF Help Tool to apply for PSLF? Does that need to be before April 30 or should I wait until the loan consolidation goes through? I have scoured WCI and all other info online I could find, and I can’t find an answer to this.
Thanks!!
I think the deadline is only for consolidation, not for applying for PSLF. I suspect you can do that later but don’t know for sure.
Mtndoc,
The deadline to apply for consolidation is April 30th. It does not have to be processed by that date. It’s not 100% clear if your PSLF form has to be signed prior to that date. This is what the guidance says – “After the adjustment in 2024, all periods credited toward IDR will also be credited toward PSLF for eligible loans and periods where the borrower certifies public service employment.”
I would make an effort to have all your employer forms signed by the end of the month even if your consolidation is not done yet.
Andrew SLA
Are residency and fellowship forbearance eligible for PSLF buyback?
pslFail,
Sure does if the employer qualifies as public service.
Andrew SLA
That’s also what I thought! There seems to be some sort of disconnect.
I spoke with student aid.gov today, they informed me those months are Not eligible for buyback and considered in school.
Eh, the servicer can tell you wrong stuff all the time. This is a flat out mistake by them. It’s why SLA was started. If this was all easy to navigate our service wouldn’t be necessary.
Residency and fellowship forbearances should count. I wouldn’t recommend you enter forbearance during that time since the payments should be very reasonable in IDR though. However, this is a method to receive retroactive credits for those previously missed months.
For those of us who were supposed to hit PSLF at the end of this year and are now stuck in a forbearance hold because of SAVE, buy back has come up on my radar. I have a question about submission timing. If my regular due date for loans is the 12th of the month, would a full month of buyback be granted if I submit on or after my theoretical due date or do I need to wait until month end. For example, if SAVE was still going, I would have hit PSLF 10/12/24. Do I submit my application 10/12 or wait until 10/31 to ensure I get employment credit for October? Under SAVE submitting it 10/12 would have been fine to hit PSLF but for buy back I can’t seem to find if you need to wait for the whole month to get employer credit or not.
Not sure anyone knows. But if you find something definitive, let us know. And let us know what you decide to do either way.
I am presently enrolled in the SAVE program. Would student loan payments made during this most recent administrative forbearance be eligible for credit in the PSLF BuyBack Program?
CTurn,
I hope so. But the guidance says months in SAVE during this administrative forbearance “may qualify” for PSLF buyback. I’m not sure I would risk these months not counting and hope the PSLF buyback program works out. Lots are switching into PAYE or IBR to not miss out on these months. I wrote all about this in a recent article on SLA.
Andrew SLA
Hello Andrew,
Looks like the loan servicers are not processing any of the IDR plans due to the hold of the SAVE plan. This is from the studentaid.gov website:
“Borrowers should note that, as a result of the administrative stay, servicers have temporarily paused processing of IDR applications until we can ensure applications are processed correctly. Borrowers should expect a lengthy delay in processing of applications, especially for borrowers applying for SAVE/REPAYE. We do not currently have an estimate of how long this will take. Borrowers should check back for updates.”
https://studentaid.gov/announcements-events/save-court-actions
So it sounds like you either stay in forbearance or switch to 10 year standard repayment plan if you want to get credit for these month.
Tuga,
You can still fill out a paper IDR application and upload it on your servicer’s website (or fax/mail).
Very frustrated with the Dept of Ed right now. It should be illegal that they are blocking borrowers from enrolling into repayment plans.
Andrew SLA
I think I may be eligible for PSLF buyback, but wonder whether I’d be responsible for paying back forbearance months during the COVID payment pause?
COVID months should not need buyback.
Andrew SLA
Here’s a PSLF question. What if I made 60 payments on my undergraduate loans (and paid them off), but then went to graduate school and have been making payments on those loans for the last 60 month – all the while working for a qualifying employer over those 10 years. That’s a history of 120 payments on qualifying loans, just not the same loans over that time. Do I qualify for PSLF? I’m in a Level repayment plan. Would I have to change to income driven?
Matt,
It depends on if you have consolidated the loans or not. See this post #7 Payment Count Is Not Reset After Consolidation
You definitely want to be in an IDR plan now. The only option while SAVE is in legal limbo is IBR.
Thanks for the helpful information! I’m looking forward to hearing more from you as the legal process evolves.
If you had to project into the future, what do you think will happen with this buyback program? Will these current months of forbearance be eligible for buyback? Roughly when will we know?
Are months of missed payments eligible for buyback? I missed a couple months >10 years ago.
Thank you again!
Michael,
No idea if buyback will survive in the future. Only time will tell. I do know that as easy as it was created, it could be eliminated. You can’t apply for PSLF buyback until you have 10 years of qualifying employment. I have no idea how far along you are. If you have 10 years of nonprofit work then apply for it. If you don’t have enough employment then you will have to wait to apply.
Months eligible for buyback are generally times of forbearance when you had no payment and were employed by a nonprofit.
Andrew SLA
I have 120 months of employment certified and just submitted my application for buyback for the last 4 months due to the SAVE administrative forbearance. Any idea on how long it has been taking to have a buyback request processed? I had to submit my employment certification form 3x over a 3 month period for them to process it and the 3rd time it was completed in 48 hours, so it seems like maybe things are moving again. Thank you so much!
Hi Nik,
In my experience it takes 2-4 months for Buyback to be processed.
Andrew SLA
I should have 10 years of qualifying employment April of next year. I’m currently on pause with the SAVE plan. If I’m able to buy these months back, will it be at the payment amount I was making under the SAVE plan at the time of the pause?
Hi Stephanie,
It should be based on whatever you would have paid during the buyback time. Let’s hope that it is around next year when you apply for it.
Andrew SLA
1) Can I apply for buyback now if I’m currently in the involuntary SAVE forbearance? (I just hit 120 months of federal employment but about 7 of them have been while in the SAVE forbearance).
2) If I do need to change my plan to get out of the forbearance before applying for buyback/forgiveness will my income need to be recertified at that time?
Thank you for this informative article!
Sasha,
1.) Yes
2.) Yes
Andrew SLA
Hey Andrew, Thank you for this awesome article!
I’ve been on automatic forbearance on SAVE since July 2024; I have 113/120 qualifying payments. I continued to make payments in Aug, Sep, Oct and weirdly enough my Aug 2024 payment was counted as qualifying towards PSLF but Sep & Oct were not. I asked studentloans gov rep on chat and they didn’t know why Aug 2024 was counted – was this an error?
I stopped making payments after the October payment. I applied for the buyback last month, April 2025.
Question: should I resume to make payments during this forbearance like I did in Aug, Sep, Oct? or should I try to change my repayment plan from SAVE to ICR. My payments before the administrative pause was $574 and now running the loan simulator on ICR would be a whopping $4000.
I’m really hoping to have my PSLF done by Dec 31 of this calendar year. I hear you have to pay taxes on the amount forgiven starting Jan 2026?
MKA,
I would not make any payments on your loans while they are in forbearance as this doesn’t further your progress to PSLF. It’s just reducing the balance you’ll have forgiven.
The easiest way to be done with payments this year is to go back into repayment now on a plan like ICR, IBR or PAYE. Otherwise, you can wait out buyback. But, from my experience buyback is taking forever (six months +). Some would rather take the higher payments now to be done with this rather than rely on buyback.
I am currently at 116 qualifying payments. I do have 2 months of buyback that would qualify from last year, so I could apply for this in October after 118 payments. But with the current backlog of buyback applications, would it be better to just stick with my current payments until I hit 120 in December and apply for PSLF?
Don’t you get the money back either way eventually?
Yes, true. As long as starting the Buyback process does not hinder my ability to continue making monthly payments, I guess I will go ahead and apply for it at 118 in the off chance it gets approved prior to hitting 120 in December. Thanks!
I’d go back into repayment if I were you at this point being so close. Buyback is so delayed right now.
Andrew SLA