Deep within the vault of federal student loan policy, there is a seldom-spoken-of program called the PSLF Buyback. It hasn’t been around for terribly long and received little fanfare when it was announced. The PSLF Buyback allows borrowers with 120 months of eligible employment to make payments to cover months that were previously ineligible due to deferment or forbearance, such as borrowers whose payments were paused while on the SAVE plan. For those select few who are close to achieving Public Service Loan Forgiveness, it can be a helpful boost to get them over the PSLF finish line sooner than expected.
The PSLF Buyback was created by the Biden Administration in 2023 as part of their Negotiated Rulemaking process to reform federal student loans. It allows the Department of Education to make proposed changes to existing policies without the approval of Congress. Before those changes can be implemented, however, there must be a comment period in which both organizations within the industry and the general public can weigh in. Afterwards, the negotiators examine the comments, revise regulations, and submit them for implementation.
Neg. Reg., as it’s known in the biz, was the process at the heart of some of the more successful student loan reforms and programs of the last few years, including the Limited Waiver Opportunity and the IDR Account Adjustment. Because the Buyback was created through Neg. Reg., it can’t just be cancelled willy-nilly. Unless Congress eliminates it (which they haven’t), it would need to be dismantled by another Neg. Reg. process. The most recent one, which wrapped up in July, however, made no changes to the Buyback program.
Borrowers who already have 120 months of qualifying employment for PSLF, but haven’t made 120 payments, can use the PSLF Buyback to retroactively cover missing payments. That means that borrowers with 10 years of non-profit, government, or other qualifying work can achieve PSLF even if they spent part of those 10 years in a deferment or forbearance. If, for example, you went back to school part-time and your loans were put in forbearance, but you kept working full-time, that period is eligible for the Buyback. Or if you applied for the SAVE plan and have been in forbearance, but just hit the 10-year mark towards PSLF, you could buy those missing months back and hit your 120 qualifying payments.
To apply for the Buyback, you’ll need to identify the months that you believe should be eligible and the amount that you would have paid if you hadn’t been in forbearance or deferral. Then, you’ll submit a PSLF Reconsideration Form. To be considered, you must have already hit your 120 months of qualifying employment; only the payments can be missing.
If you’re interested in the Buyback and think you may qualify, give us a call. It can be tricky to figure out how much you should owe, but we’ll crunch the numbers for you and make sure your application is ready to go!
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