Big Update For Student Loan Forgiveness Buyback Program

Overview

• Author: Adam S. Minsky
• Date: May 6, 2025
• Context: Student loan forgiveness update amidst legal and administrative challenges.

Key Developments

PSLF Buyback Program

• Purpose: Allows borrowers to buy back periods of nonpayment for loan forgiveness.
• Eligibility: Requires 120 qualifying employment months; nonpayment periods can be retroactively credited if criteria are met.
• Challenges: Many borrowers affected by legal challenges and involuntary forbearance.

Legal and Administrative Issues

• Legal Challenges: Ongoing legal debate, particularly affecting the SAVE plan borrowers.
• Department of Education: Struggles to process buyback requests due to a backlog, largely caused by legal injunctions.

How PSLF Buyback Works

• Application Requirements:
  • Borrowers must have 120 months of qualifying employment.
  • The buyback involves a lump-sum payment to retroactively credit nonpayment periods.
• Limitations:
  • Ineligible periods include in-school, grace, default, and bankruptcy periods.
  • Loans already paid off or discharged cannot be included.

Court and Department Actions

• February Appeals Court Order: Led to shutdown of income-driven repayment system.
• American Federation of Teachers Lawsuit: Pushed for reopening IDR applications, resuming processing.
• Department Commitments:
  • To provide detailed updates to the court on PSLF Buyback processing.
  • By May 15, a report on eligible forbearance types is expected.

Application Process

• Steps:
  1. Certify employment for 120 qualifying months.
  2. Submit buyback request through PSLF Reconsideration portal.
  3. Include specific language in the request for assessment.
• Calculation: Typically based on the borrower's prior repayment plan, but adjustments needed due to legal restraints (e.g., SAVE plan).

Future Expectations

• Upcoming Updates: Department of Education to clarify eligible forbearance types.
• Monitoring: AFT and court to oversee the department’s compliance and processing efficiency.

Recommendations for Borrowers

• Ensure you meet eligibility criteria before applying.
• Stay informed on updates and follow the Department of Education’s guidance closely.