Public Service Loan Forgiveness is not on hold. The Department of Education is still processing applications through StudentAid.gov and still granting forgiveness to borrowers who hit 120 qualifying payments while working full-time for a qualifying employer. What has stalled is the SAVE repayment plan that many PSLF borrowers were using to get there. SAVE has been blocked by litigation and is now being formally wound down, and the more than seven million borrowers parked in its administrative forbearance are not earning PSLF credit for those months. If your loans feel frozen, that is almost certainly what you are running into, and the fix is on your side of the equation.
What Is Still Running and What Is Not
The core PSLF program has operated continuously. Borrowers on qualifying repayment plans who have accumulated 120 eligible payments while employed full-time by a qualifying employer can apply for and receive forgiveness. Applications go through StudentAid.gov, which became the sole hub for PSLF after management moved away from the private servicer MOHELA in mid-2024.
That transition did create a temporary processing pause from May 1 through July 31, 2024, when borrowers couldn’t submit new forms or check their payment counts. Payments made during that window still count toward the 120, as long as the borrower stayed employed by a qualifying organization and kept paying on schedule. The transition itself was not a payment pause.
SAVE is the piece that is genuinely stuck. SAVE was an income-driven repayment plan introduced by the Biden administration that offered lower monthly payments and a faster path to forgiveness. Republican-led states challenged it, and the 8th Circuit Court of Appeals issued an injunction blocking key provisions. The Department of Education responded by placing all SAVE enrollees into administrative forbearance, meaning no payments were due.
In December 2025, the Trump administration announced a proposed settlement with Missouri that would formally end SAVE. Under the agreement, the Department will not enroll any new borrowers in SAVE, will deny pending applications, and will move all current SAVE borrowers into other repayment plans. The Department called the settlement “the definitive end” of the SAVE plan and committed to removing it from federal regulations through negotiated rulemaking.
Why SAVE Forbearance Months Don’t Count Toward PSLF
This is the part that catches people off guard. Months spent in SAVE administrative forbearance do not count as qualifying payments toward PSLF. Your loans have been on hold, but so has your forgiveness clock. Every month in this forbearance is a month that does not bring you closer to 120.
Interest on SAVE loans also began accruing again on August 1, 2025, so borrowers in this status are watching their balances grow without earning any PSLF credit. The longer you stay in SAVE forbearance without switching plans, the worse the trade gets.
If you were on a different qualifying repayment plan before switching to SAVE, that earlier progress is not lost. Those prior qualifying payments still count. But any month spent in SAVE forbearance is a gap in the timeline that you either replace with qualifying months later or address through a buyback.
Getting Out of SAVE Forbearance
If you are pursuing PSLF and currently stuck in SAVE forbearance, switching to another income-driven repayment plan is the most direct way to start earning qualifying payments again. MOHELA and the Department of Education have resumed processing applications for Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR). Payments under any of these plans count toward both IDR forgiveness and PSLF.
You can compare options using the Loan Simulator on StudentAid.gov, which estimates your monthly payment under each plan based on your income and family size. To actually switch, submit an IDR application through the same site. There is a significant processing backlog. One expert estimated that if the queue reaches seven million applications after SAVE’s termination, it could take servicers more than two years to work through them at current rates.
If you do not submit an application for a new plan within 60 days of being moved out of SAVE, you will be placed back into whatever repayment plan you were on before SAVE. If SAVE was your only plan, you stay in forbearance. Even with a long processing wait, submitting the application is what starts the clock on getting into an active, qualifying plan.
The One Big Beautiful Bill Act also creates a new plan called the Repayment Assistance Plan (RAP), which the Department expects to make available by July 1, 2026. RAP is meant to replace the current tangle of IDR options with a single simplified plan. The same law eliminated the partial financial hardship requirement for IBR, which should make it easier for SAVE borrowers to qualify in the interim, though the application forms and Loan Simulator may not yet reflect the change.
The PSLF Buyback Option
For borrowers who have already reached 120 months of qualifying public service employment but are short on qualifying payments because of time in forbearance or deferment, there is a buyback provision. Buyback lets you pay what you would have owed during those forbearance months to convert them into qualifying PSLF payments.
Buyback is available only if you already have 120 months of qualifying employment and purchasing those months would result in forgiveness under PSLF or Temporary Expanded PSLF (TEPSLF). You cannot use it preemptively while still building toward the threshold.
The cost is calculated based on what your payment would have been under a qualifying repayment plan during the forbearance period. If the pause lasted less than 12 months, the Department uses the lower of the IDR payments from immediately before or after that period. For longer gaps, you may need to provide tax returns and family size information for each covered year. Buyback requests go through the Federal Student Aid website once eligibility is confirmed.
This is the fallback for SAVE borrowers who choose to ride out the forbearance rather than switch plans now. The total out-of-pocket cost is roughly the same either way: monthly payments under IBR now, or the equivalent buyback amount later. The practical difference is that switching plans earns credit in real time instead of relying on a buyback process after the fact.
A New Employer Rule Coming July 1, 2026
One more development every PSLF borrower should know about, because it is unrelated to the SAVE freeze but often gets tangled up with it in coverage. The Trump administration finalized a rule in October 2025 that changes which employers qualify for PSLF, effective July 1, 2026. The rule amends the definition of “qualifying employer” to exclude organizations that engage in activities amounting to a “substantial illegal purpose.”
The listed categories of disqualifying activity include aiding violations of federal immigration laws, supporting terrorism, engaging in illegal procedures on children, trafficking children across state lines, engaging in a pattern of illegal discrimination, and engaging in a pattern of violating state laws. The Department weighs whether illegal activity is “so severe or pervasive” that more than an insubstantial amount of the organization’s activities have an illegal purpose. Minor compliance issues will not trigger the rule.
The rule applies prospectively only. No payments made before July 1, 2026 will be retroactively disqualified, and only illegal activities occurring on or after that date will be considered. If your employer is later found to have a substantial illegal purpose, you receive full credit for every month up until the effective date of that determination, including the month in which it happens.
For the vast majority of government employees, teachers, and healthcare workers at mainstream nonprofits, this rule will not change anything. Borrowers at advocacy organizations or nonprofits operating in politically contested areas should be aware the standard exists.
PSLF Forgiveness Is Still Not Taxable
Starting January 1, 2026, some forms of student loan forgiveness became taxable again at the federal level after a temporary exemption under the American Rescue Plan Act expired. That change does not apply to PSLF. Forgiveness under PSLF has its own permanent tax exclusion in federal law, which excludes loan discharge from gross income when the discharge follows a period of work in certain professions for a broad class of employers. The Department of Education and the IRS have both confirmed that amounts forgiven under PSLF are not treated as taxable income.
This is a meaningful distinction from IDR forgiveness under other plans, which will generate a federal tax bill in 2026 and beyond now that the temporary exemption has lapsed. If you are close to 120 payments, there is no federal tax bomb waiting on the other side of PSLF forgiveness. Some states may still tax forgiven student loan amounts under their own income tax codes, so check your state’s rules if you are nearing the finish line.