[UNITED STATES] The U.S. Department of Education has announced significant updates to the Public Service Loan Forgiveness (PSLF) Buyback Program, providing federal student loan borrowers with a new opportunity to have previously ineligible periods of deferment or forbearance count toward their loan forgiveness. This development comes after months of uncertainty and is expected to impact thousands of borrowers seeking relief.
What Is the PSLF Buyback Program?
The PSLF Buyback Program allows borrowers who have worked in qualifying public service jobs for at least 10 years but have periods of deferment or forbearance that did not count toward their 120 qualifying payments to "buy back" those months. By making a payment equivalent to what they would have owed during those periods, borrowers can retroactively earn credit toward forgiveness.
This program is particularly relevant for individuals who took time off for reasons such as military service, AmeriCorps, or other qualifying deferments that were not previously counted under the standard PSLF rules.
Eligibility Criteria
To qualify for the PSLF Buyback Program, borrowers must meet the following requirements:
Outstanding Loan Balance: Must have an active federal Direct student loan.
Qualifying Employment: Must have at least 120 months (10 years) of approved qualifying employment in a public service job.
Eligible Periods: The deferment or forbearance periods in question must have occurred during qualifying employment and must not have been previously counted toward PSLF.
Loan Status: Loans must not be in default, discharged, or already forgiven.
Borrowers can check their loan status and employment history through the StudentAid.gov portal to determine eligibility.
How Payments Are Calculated
The Department of Education calculates the buyback payment based on what the borrower's monthly payment would have been during the deferment or forbearance period. If the borrower was enrolled in an Income-Driven Repayment (IDR) plan before or after the period, the lower of those two payment amounts is used. If the borrower was not in an IDR plan, the department will determine the payment based on the borrower's income and family size at that time.
For example, if a borrower was in a $0 payment status during a period of forbearance due to low income, the buyback payment would be $0, allowing that period to count toward PSLF without any additional cost.
Application Process
To apply for the PSLF Buyback Program, borrowers must submit a PSLF Reconsideration Form through the Department of Education's PSLF Help Tool. The form must include the specific language:
“I have at least 120 months of approved qualifying employment, and I am seeking PSLF or TEPSLF discharge through PSLF buyback. Please assess my eligibility for PSLF buyback.”
Once submitted, the Department will review the request and, if approved, will send a buyback agreement detailing the amount due and payment instructions. Borrowers must make the payment within 90 days of receiving the agreement.
Timeline and Considerations
The Department of Education has advised borrowers to wait until the completion of the Income-Driven Repayment (IDR) Account Adjustment process before submitting buyback requests. This adjustment, which aims to automatically count certain periods of deferment and forbearance toward PSLF, is expected to be completed by summer 2025.
Borrowers should continue making their regular payments during this period to avoid delinquency. Once the IDR Account Adjustment is finalized, the Department will notify borrowers of any changes to their qualifying payment counts.
Impact on Borrowers
The PSLF Buyback Program offers a significant opportunity for borrowers who have dedicated years to public service but were hindered by periods of non-qualifying deferment or forbearance. By allowing these periods to count toward forgiveness, the program aims to provide a more equitable path to student loan relief for public service workers.
However, borrowers should be aware of potential delays in processing due to the ongoing system updates and should plan accordingly.
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