Key Points
- PSLF Buyback allows borrowers to count past deferment or forbearance months toward forgiveness.
- A small team at Federal Student Aid (FSA) is manually reviewing applications, which is now uncertain in the face of layoffs.
- Processing times are reported to take 60-90 days, with more delays expected.
Public Service Loan Forgiveness (PSLF) is a program that erases federal student loan balances for borrowers who have made 120 qualifying monthly payments while working for a government or nonprofit employer.
The PSLF Buyback program offers eligible borrowers the chance to retroactively pay for certain past months spent in deferment or forbearance to earn PSLF credit, but only if they already have 120 months of approved employment and the buyback will result in loan forgiveness.
The program is meant to help borrowers who were forced into forbearance or deferment, often due to requirements by their loan servicer or the Department of Education, and were left short of qualifying for PSLF.
However, borrowers attempting to get their loans forgiven have reported long wait times (months), and given the recent layoffs at the Department of Education, there's concerns this could be drawn out more.
How Does PSLF Buyback Work?
PLSF Buyback allows borrowers seeking Public Service Loan Forgiveness to make payments for time in forbearance as a lump sum.
Borrowers interested in PSLF Buyback must submit a request through PSLF Reconsideration and specify that they are seeking to buy back months. If approved, they must make a lump-sum payment equivalent to what they would have owed under an Income-Driven Repayment (IDR) plan for the months they are buying back.
Key details on eligibility:
- Borrowers must have 120 approved months of qualifying employment before applying.
- Only deferment or forbearance periods tied to eligible employment can be bought back.
- The buyback amount is calculated based on what the borrower’s IDR payment would have been at the time.
- Payments must be completed within 90 days of receiving the buyback agreement.
Once the payment is made, the borrower’s loan is processed for PSLF forgiveness.
How Long Does PSLF Buyback Take?
Borrowers have reported processing times of 60 to 90 days, with some experiencing longer delays. PSLF Buyback requests are handled manually by a small group at the Department of Education. Each application has to be reviewed, approved, and a custom buyback agreement made for each borrower.
Given the large amounts of forbearance periods due to various lawsuits, a significant number of borrowers have submitted buyback requests.
However, the Trump administration moved to lay off a large number of employees this week at the Department of Education, including over 300 employees in Federal Student Aid. It's likely that processing for PSLF Buyback will now take even longer, if they are being processed at all.
Buyback Processing Timeline:
- Request Submitted: Borrowers submit their PSLF Buyback request through PSLF Reconsideration.
- Initial Review: FSA manually reviews employment certification and buyback eligibility.
- Buyback Agreement Sent: If approved, the borrower receives a buyback agreement detailing the amount owed.
- Payment Window: Borrowers have 90 days to make the required payment.
- Final Processing: After payment, forgiveness is applied, but it may take several weeks to reflect in the borrower’s account.
While the program provides a pathway to faster loan forgiveness, the processing delays mean borrowers should be prepared to wait at least two to three months (at least) after submitting their request.
Is Buyback Protected In The Future?
Despite all the proposed changes to student loans, PSLF buyback does appear safe for now. It has bipartisan support because borrowers are making payments towards their loans, and that's viewed as a good thing.
However, it's not guaranteed to exist forever. While PSLF was created by Congress (and thus would require Congressional action to eliminate), PSLF Buyback was created through rulemaking. This means that the current administration could create new rules to change the program or eliminate it.
Since borrowers are making lump sum payments, this currently doesn't appear to be under threat. But with the layoffs at the Department of Education, the manual process of PSLF buyback may be facing serious delays.
If you are eligible for PSLF buyback, you should submit your reconsideration request as soon as possible to make sure you're in the queue.
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Editor: Colin Graves
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.