Teachers, nurses and other qualified public employees enrolled in the public service loan forgiveness program can see their student loan balances erased after 10 years in their field and 120 qualified monthly loan payments . If you received debt relief last year or were expected to hit the 120-payment mark this year, a new program can help you apply for debt relief during the SAVE payment break.
The PSLF Buyout Program offers the opportunity for eligible borrowers to “buy back” the free months that did not count toward forgiveness while their loans were in foreclosure or deferment.
The buyback option may help some borrowers in the PSLF program get debt relief faster, but it’s not a shortcut to speeding up your progress toward PSLF, said Elaine Rubin, director of corporate communications at Edvisors.com. To qualify you will need to have completed 10 years of service and meet other requirements. If you’re only five years into your teaching position, for example, you can’t use this program to pay off the remaining five years of payments to get debt relief now.
Here’s how to find out if you qualify for the rebate program and how to apply.
Read more: 6 Moves Student Loan Borrowers Should Make Before The White House Transitions
What is the PSLF Purchase Program?
The PSLF repayment program allows you to buy back several months of skipped payments to count as qualifying payments under PSLF, which would speed up debt cancellation for a small number of qualified borrowers.
For example, if you are a teacher who has worked for 130 months in this role, you have already exceeded the 10 years required to qualify for public loan forgiveness. But if your student loan was in deferment or forbearance for 15 months, you may have only made 115 months of payments. Normally, this means that you are not yet eligible for forgiveness under the PSLF program.
Under the government’s PSLF repayment program, you can now make a payment (either in a lump sum or in multiple payments) within 90 days to cover the 5 months needed to meet your obligation and receive debt relief.
How much will you need to buy again? It depends on how many months short of the 120 target you are and how much your monthly payment is. If you were on an income-driven repayment plan, your monthly payment could be as low as $0, Rubin said. But if your monthly payment is $200 and you’ve only made 117 payments, you’ll need to pay $600 to complete the redemption process.
After you file an application requesting a refund, the government will detail the total amount you must pay your servicer within 90 days in order to have the remaining balance forgiven.
Who is eligible to purchase PSLF?
There are several requirements to be eligible to purchase PSLF:
In other words, you cannot request a buyback if you have less than 10 years of service, and a buyback does not apply to outstanding loans or paid-off loans.
You can check your qualifying PSLF payments at StudentAid.gov, the central dashboard for this program. You can view more detailed information about eligibility requirements here.
How do I apply for the PSLF payback program?
Here are the steps to apply for the PSLF refund program:
- If you have unreported periods of qualified employment, submit them using the PSLF Assistance Tool.
- Wait to review how the payment number adjustment applies to the PSLF loan.
- Confirm the missing pay months you want to buy back and make sure you’ve approved qualifying employment for those months (see how to verify these months).
- Submit a purchase request through PSLF Review.
- Wait to hear back from StudentAid.gov about your final payment amount.
Rubin warns that the app is a little confusing. “Be patient, but make sure your information is filed,” Rubin said.
You can check the status of your application through StudentAid.gov.
Can I apply to buy PSLF if I am enrolled in SAVE?
Yes, you can apply to buy PSLF if you are enrolled in a valid education savings plan. The SAVE program, an income-driven repayment plan, is considered a type of forbearance eligible under PSLF repayment.
Payments have been pending for SAVE borrowers since the summer, so if you’re a PSLF borrower who would have received debt relief in the fall or winter, you’re a prime candidate for the buyback program.
How long will the PSLF purchase program be open?
Rubin said the PSLF buyout program is currently open and there is no hard deadline for applications.
That said, once you submit your application and learn your repurchase amount, you have 90 days to make the repayment to your credit servicer. If you fail to pay the full amount within that time frame, you must start over with a new application.
With a new administration in the White House, the long-term fate of the PSLF acquisition program is unclear. Rubin recommends taking the time now, while the PSLF buy-in is still available, to determine if you qualify and submit your application.
