PSLF Buyback Program: Eligibility, Costs & How to Apply for Loan Forgiveness Faster

Federal student loans have become highly political in recent years, leaving borrowers to ride the emotional rollercoaster of navigating big changes with confusing guidance — alongside a slew of promises and legal challenges. 

Most recently, borrowers on the new SAVE plan were put into administrative forbearance while the courts decide its fate. However, the Department of Education announced these months of forced forbearance won’t count toward Public Service Loan Forgiveness (PSLF) or income-driven repayment (IDR) forgiveness, delaying loan forgiveness for many borrowers.

With so much noise surrounding student loans, a major change to PSLF regulation has mostly flown under the radar: the PSLF Buyback program. This new program allows borrowers to retroactively “buy back” months for periods of forbearance or deferment that coincide with qualifying employment. But like everything else with student loans, it isn’t necessarily that straightforward.

How PSLF Buyback works

The PSLF Buyback program offers a valuable opportunity to public service professionals — including physicians who practice at government and nonprofit hospitals — to shorten their loan repayment timeline by recouping previously ineligible months.

Related: PSLF Buyback Could Be an Option for Borrowers in the SAVE Plan Forbearance, But It’s Complicated

Normally, months spent in forbearance or deferment don’t count as PSLF-qualifying payments. However, with the expired PSLF Waiver and IDR Account Adjustment, borrowers had the chance to receive PSLF credit for extended forbearances (defined as 12 consecutive months or 36 cumulative months). 

But for those who have shorter bouts of forbearance here and there or are stuck in forbearance due to the SAVE plan debacle right now, the PSLF Buyback program can help secure loan forgiveness faster.

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Who is eligible for the PSLF Buyback program?

To take advantage of the PSLF Buyback program, you must make a lump sum payment in exchange for “buying back” forbearance or deferment months that don’t count toward loan forgiveness. When applying for buyback months, you must:

• Still have an outstanding balance on your Direct Loans.
• Have qualifying employment with a nonprofit organization or governmental agency during the months you want to buy back.
• Meet or exceed the 120 qualifying payments threshold needed to receive Public Service Loan Forgiveness after buying back months.

If you don’t meet these requirements, your request for buyback will be denied.

How much does PSLF Buyback cost?

The PSLF buyback lump sum amount will vary by borrower since it’s based on what you likely would have paid on an income-driven repayment (IDR) plan during the months you’re trying to buy back.

The formula is essentially a two-part calculation depending on whether you were or weren’t enrolled in an IDR plan at that time:

1. If you were enrolled in an IDR plan. The Department of Education will look at what your IDR payment was right before or after the months you’re buying back and use the lower of the two to determine the cost. For example, if you were on PAYE, they’ll take what your PAYE payment was supposed to be for those months you were on forbearance and multiply it by how many months you were in forbearance, and that’s the lump sum you’ll have to pay.
2. If you weren’t enrolled in an IDR plan. Be prepared to provide tax returns and a statement of your family size for the calendar years of the months you’re buying back. This information will be used to determine how much you would have paid on the cheapest IDR plan at that time. Note this information must be sent within 30 days of their request, or your buyback amount will be calculated based on the 10-Year Standard Plan instead.

Here’s some good news: If your IDR payment would have been $0 for the months you’re buying back, no payment will be required and they’ll automatically proceed with loan forgiveness.

PSLF Buyback amount: What happens if SAVE is repealed?

How will the PSLF buyback amount be calculated for SAVE borrowers if it’s repealed? TBD…

We assume calculations will revert back to the payment that would have been made under the old Revised Pay As You Earn (REPAYE) plan, which is what SAVE replaced. In which case, your monthly cost could be $75 to $150 more expensive than it would be on SAVE — depending on individual circumstances.

Otherwise, they might use the next best option that we know is eligible for PSLF, such as Income-Based Repayment (IBR). Again, there’s currently confusion around what exactly will happen if SAVE is repealed and deemed ineligible for PSLF credit, so we’ll have to see what plays out once the Supreme Court makes its final decision.

Restrictions and limitations for the PSLF Buyback program

While the PSLF Buyback program provides an opportunity to recoup previously ineligible months, there are limitations to be aware of:

• You won’t be able to move forward with buying back months if those months don’t allow you to complete the required 120 qualifying payments.
• Loans that have already been paid off, forgiven or discharged are not eligible.
• You can’t buy back months when your loan was in certain statuses, such as during in-school deferment or during a grace period.
• If you consolidated your loans, you’re unable to buy back months that occurred before the Direct Loan Consolidation.

This last restriction is huge, considering a lot of borrowers consolidated their loans as part of the IDR Account Adjustment. 

Let’s say Anne consolidated her loans in October of 2023 and has since been on PAYE. She has nine months of forbearance from 2015. If she applies for PSLF Buyback, she won’t be allowed to go back and purchase those months spent in forbearance in 2015 because they happened pre-consolidation.

Unfortunately, a Direct Consolidation Loan is a new loan. So, the Department of Education is only allowing borrowers to reach back as far as when that new consolidation loan was settled. We can’t buy back months before that time period.

How to buy back months for PSLF

The process for buying back months is fairly streamlined:

1. Make sure you’re eligible for the PSLF Buyback program. If you won’t hit 120 payments — including all months of repayment and the months you’re buying back —  you’ll need to wait to apply. You can check for eligible months via the PSLF Tracker on your StudentAid.gov account. It should separate which months are receiving PSLF credit versus ones that need employment certification versus ineligible months. 
2. Submit your PSLF form using the PSLF Help Tool. This is the form needed to certify PSLF employment and receive loan forgiveness.
3. Request PSLF Buyback via PSLF Reconsideration. Copy and paste the following language into your request: “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.”
4. Wait for a response. If you’re eligible for PSLF Buyback, you’ll receive a buyback agreement via email detailing your required lump sum payment.

The full amount must be paid within 90 days of receiving the buyback agreement to receive PSLF loan forgiveness. Otherwise, the agreement will be void, and you’ll have to resubmit your buyback request at a later date.

What the PSLF Buyback means for you

The PSLF Buyback program serves as a second chance to receive PSLF credit for forbearance months that weren’t resolved with the PSLF Waiver and for those in SAVE forbearance.

Let’s say you're on track to get loan forgiveness in December 2024 and currently on SAVE. Therefore, these months of administrative forbearance aren’t counting toward PSLF. Although you can’t do anything about it right now, you can estimate and save up for your buyback lump sum amount. Then, come December, apply for PSLF as if you were going to complete the 120 payment requirement and submit a buyback request for the entire administrative forbearance period.

But what if you’re one of the many borrowers who consolidated during the PSLF Waiver or IDR Account Adjustment? 

If you had a lot of forbearance in your past or very long consistent periods of forbearance, those months should count toward PSLF. W

We’re still waiting for the IDR Account Adjustment to be complete, so hold tight if that’s you. You will likely get credited months at no cost to you versus submitting a buyback request early. That said, if you aren’t credited for your pre-consolidation forbearances, you can submit an FSA complaint, file a Consumer Financial Protection Bureau (CFPB) complaint or reach out to constituent services for your local congressperson.

Have additional questions or concerns about PSLF Buyback? Leave a comment or check out the PSLF Buyback page for frequently asked questions.