Key Points
- The settlement agreement ending the SAVE lawsuit also explicitly prohibits the Department of Education from enforcing the original REPAYE plan — a detail that has received little attention but has significant consequences for PSLF Buyback borrowers.
- The Department of Education has been using REPAYE payment amounts to calculate PSLF Buyback offers. With REPAYE now blocked, IBR will likely become the basis for those calculations.
- PSLF Buyback borrowers who have been waiting in forbearance limbo should take this as another reason to do the math on waiting: the buyback price is likely to go up, not down.
Most coverage of the end of the SAVE student loan repayment plan has been on the 7 million borrowers stuck in limbo.
But buried in Section 11 of the agreement is a provision that has received far less attention: the Department of Education is also barred from enforcing the original REPAYE plan.
For the vast majority of borrowers, REPAYE was already functionally gone — it was renamed and replaced by SAVE in 2023. But for a specific group of borrowers pursuing Public Service Loan Forgiveness Buyback, the loss of REPAYE is not academic. It changes the math on what they owe.
Since SAVE was enjoined, the Department of Education has been using REPAYE as the basis for most PSLF buyback offers. That's likely to change moving forward.
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What The New Settlement Agreement Says About REPAYE
The SAVE Plan was created in 2023 by amending and renaming the existing REPAYE (Revised Pay As You Earn) plan. Legally, they are the same regulatory vehicle: the SAVE Final Rule modified the REPAYE regulations already on the books.
As a result, the settlement agreement makes clear that both SAVE and REPAYE are done.
Section 9 bars loan forgiveness “under the SAVE Plan (or under the REPAYE plan)” using the Department’s income-contingent repayment authority as interpreted by the SAVE Final Rule. Section 11 goes further: “Defendants will likewise not enforce the original REPAYE rule or otherwise enroll any borrowers, including SAVE borrowers, into the original REPAYE Plan.”
That language is unambiguous. REPAYE is off the table. The Department cannot use it to enroll borrowers, calculate payments, or forgive loans using this plan.
How PSLF Buyback Works And Why Old Repayment Plans Matter
PSLF Buyback was created to give borrowers a way to "buy back" months that didn’t count toward Public Service Loan Forgiveness because a borrower was in an eligible forbearance (like the SAVE forbearance). Instead of those months simply being lost, a borrower can make a lump-sum payment representing what they would have paid during that period under a qualifying income-driven repayment plan.
The calculation is straightforward in concept: take the monthly payment amount the borrower would have had under a qualifying IDR plan, multiply by the number of months being bought back, and that’s the buyback amount. But “which IDR plan” is the critical variable. Different plans produce different monthly payment amounts — sometimes dramatically different ones.
When the courts blocked the SAVE plan in 2024 and placed borrowers into forbearance, the Department was using REPAYE as the basis for PSLF Buyback offers for those affected borrowers.
REPAYE calculated monthly payments as 10% of discretionary income, where discretionary income was defined as adjusted gross income above 225% of the federal poverty line. That formula was not much different than SAVE because of the higher poverty line cut-off.
Switching To IBR Will Mean Higher Buyback Amounts
With REPAYE now off-limits, Income-Based Repayment (IBR) is the most likely calculation basis for PSLF Buyback going forward. IBR is available in two versions depending on when a borrower first took out federal student loans:
- New IBR (for borrowers who had no federal loan balance before July 1, 2014): payments are 10% of discretionary income, where discretionary income is AGI above 150% of the federal poverty line.
- Old IBR (for borrowers who had a federal loan balance before July 1, 2014): payments are 15% of discretionary income, where discretionary income is AGI above 150% of the federal poverty line.
Compare that to REPAYE: 10% of AGI above 225% of the poverty line. The difference in the poverty line threshold is significant. Using a 225% threshold instead of 150% means a larger portion of income is shielded from the calculation, producing a lower discretionary income figure and, in turn, a lower monthly payment.
Furthermore, many borrowers seeking PSLF buyback today likely took out a loan before 2014 - meaning they'd be subject to the Old IBR calculation.
The shift from REPAYE to old IBR could produce a buyback amount that is substantially higher. A borrower who expected a buyback of $3,000 under REPAYE could find themselves facing $5,000 or more under old IBR, depending on their income and family size.
The Department of Education has not yet issued formal guidance on what calculation basis will replace REPAYE for PSLF Buyback. That uncertainty itself is a risk for borrowers who are still waiting.
Waiting Longer Could Cost You More
PSLF Buyback borrowers have been in an uncomfortable holding pattern since the SAVE injunction took effect in 2024. Many chose to stay in forbearance, continuing to work in qualifying public service jobs, accumulating non-qualifying months that they planned to buy back later. The working assumption was that the buyback price would be calculated using the REPAYE formula — at least for the first 12 months of buyback.
That assumption is now legally untenable. The settlement’s explicit prohibition on REPAYE means the Department cannot use it as a buyback calculation basis. Going forward, the calculation is likely to use IBR.
Furthermore, each month after the first 12 months is calculated at whatever you're supposed to be paying on IBR today - so you don't get any additional benefit by waiting.
Compound that with a 3 year backlog to process buyback applications - and borrowers should really think twice.
Every additional month of waiting means one more month that will need to be bought back, but at what you're supposed to be paying today anyway. You have to do the math on how much you're really saving versus the time you're waiting. Are you even saving anything at all - because we've found quite a few borrowers who aren't saving anything!
You have to do the math on how PSLF buyback is calculated!
Action Steps Now
For borrowers pursuing PSLF, don’t wait to act. The Department has not yet explained what replaces REPAYE for buyback calculations, but the settlement makes clear that REPAYE is gone.
If you're pursing PSLF, it's likely a better pathway for most borrowers to simply enroll back into a repayment plan and do PSLF "the old fashioned way". It may get you across the 120 finish line quicker, for nearly the same price.
There are circumstances where buyback can deliver significant savings - for example, if your income today is much higher than previous years. In those scenarios, buyback can still make sense, but you have to compare it.
The key is math: if you're pursing PSLF and in SAVE forbearance, it's time to do the math.
Common Questions
What did the recent SAVE settlement change for PSLF Buyback borrowers specifically?
The SAVE settlement prohibits the Department of Education from processing payments or loan forgiveness under SAVE or REPAYE.
Why does banning REPAYE matter so much for how my PSLF Buyback amount is calculated?
PSLF buyback has been calculated using the lowest legal repayment plan available during the period. Since SAVE was blocked, REPAYE was used. Now that REPAYE is also blocked, it's likely IBR will be used - which has a higher payment formula.
How could switching from REPAYE to IBR increase my PSLF Buyback cost?
REPAYE was calculated as 10% of 225% of your discretionary income, while IBR is 10% or 15% of 150% of your discretionary income. It means your payment may be about 50% higher.
If I am in SAVE forbearance and pursuing PSLF, should I keep waiting or re-enroll in a repayment plan now?
You should likely enroll in a repayment plan and resume payments ASAP.
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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.