PSLF Buyback Program: Eligibility, Cost, and How to Apply

The PSLF buyback program lets public service workers pay for months they spent in certain deferments or forbearances and have those months counted toward the 120 qualifying payments needed for Public Service Loan Forgiveness. You pay what you would have owed under an income-driven repayment plan, and the months convert to qualifying payments as if you had never stopped paying. The catch is that the buyback only works as the last step to forgiveness: it must bring your qualifying payment count to exactly 120 and trigger immediate discharge.¹

The rule sits at 34 CFR § 685.219(g)(6). It became especially relevant after the SAVE plan litigation pushed millions of borrowers into an administrative forbearance that, unlike the COVID-19 payment pause, does not automatically count toward PSLF. If you were working full-time for a qualifying employer during those paused months and want them to count, buyback is the mechanism.²

Which Months You Can Buy Back

The buyback covers deferment or forbearance months on a Direct Loan after October 2007, provided you were employed full-time by a qualifying public service employer during that time. It is designed to fill a payment gap, not an employment gap.²

Several kinds of deferment and forbearance already count toward PSLF automatically as of July 1, 2023, so you don’t need to buy them back:

Economic hardship deferment
Military service deferment
Post-active-duty student deferment
Cancer treatment deferment
AmeriCorps forbearance
National Guard duty forbearance
Department of Defense Student Loan Repayment Program forbearance
Administrative or mandatory administrative forbearance

The buyback provision applies only to deferment and forbearance types not on that list.²

Two situations put months permanently out of reach. You can’t buy back time when you weren’t in qualifying public service employment. And you can’t buy back forbearance or deferment that happened on a loan before you consolidated it into a Direct Consolidation Loan, because the buyback only reaches the loan history of your current loan.³

Who Qualifies

You have to meet all three of these conditions:

At least 120 months of certified qualifying employment on your PSLF account. This is an employment count, not a payment count.
The buyback, if approved, must bring your qualifying payment count to 120 and produce immediate forgiveness. A request that would leave you short of 120 will be denied.
Your Direct Loans still have an outstanding balance when you submit the request.

The immediate-forgiveness rule is where most requests fail. Buyback isn’t a way to add payments incrementally over the years; it’s the last step.³

Your employment also has to be certified for every month you want to buy back. If any of that time hasn’t been covered by a PSLF form yet, submit one and wait for it to post to your account before you file a buyback request.⁴

What the Buyback Will Cost

The Department of Education prices the buyback based on what you would have paid under an income-driven repayment plan during the months at issue. Two calculation paths are possible depending on your IDR history around the forbearance.

If the forbearance lasted less than a year and you were on an IDR plan immediately before or after it, the Department uses the lower of your two IDR payments. A $250 payment before the gap and a $280 payment after would produce a $250-per-month buyback cost.⁵

If you weren’t on an IDR plan before or after the forbearance, the Department will ask for tax information from the relevant years to calculate what your IDR payment would have been. You’ll need documentation for each tax year the forbearance covered. The buyback cost is the lowest IDR amount you would have qualified for at the time. If you weren’t required to file taxes those years, you provide a certification of non-filing status instead.⁵

If your income during the forbearance would have qualified you for a $0 monthly payment on an IDR plan, the buyback cost is zero. The regulation gives PSLF credit for any month a borrower otherwise qualified for a $0 IDR payment.²

How to Submit a Request

Before you file, get the groundwork in order. Confirm that employment is certified for every month you plan to buy back, and identify the exact months of deferment or forbearance you’re targeting. You can review your loan status history on the StudentAid.gov dashboard under My Aid, or by downloading your aid data file. Pull your tax returns or income records for the years in question so you have adjusted gross income and family size on hand.

The request goes through the PSLF Reconsideration Tool on StudentAid.gov. Choose the option for a buyback of past deferment or forbearance periods. Include every period you want reviewed in one request; the Department has said that filing multiple separate requests slows processing.⁶

The program is administered directly by the Department of Education, not your loan servicer. Reviews are manual, and the Department has said it has no estimated timeline and that requests can take many months given the volume. Duplicate submissions and servicer calls will not speed the review.

After Approval

If you qualify, the Department sends a buyback agreement stating the total due and payment instructions. You have 90 days from the date the agreement is sent to pay the full amount to your servicer. You can split the payment across multiple transactions inside that window, but the total has to be paid in full by the deadline.¹

Once payment clears in full, your qualifying payment count reaches 120 and the Department processes the remaining balance for forgiveness.

If the Offer Expires or the Request Is Denied

Miss the 90-day deadline and the agreement is voided. You can submit a new buyback request, but the review starts over, with the same wait.

If the denial is because your count wouldn’t reach 120 even with the buyback, you’ll need to keep making qualifying payments until the math works out. If the denial turns on a disputed payment count or an employment certification problem, you can file a reconsideration request through the same StudentAid.gov tool and upload supporting documents like payment history or servicer letters.⁶

Taxes on the Forgiven Balance

PSLF discharge is not taxable at the federal level. Under 26 U.S.C. § 108(f)(1), any student loan discharge earned by working for a qualifying employer for a required period is permanently excluded from gross income. The PSLF exclusion has no expiration date, unlike the temporary American Rescue Plan Act provision covering other student loan forgiveness through 2025.⁷

Most states follow the federal treatment. A small number set tax rules independently of federal law and could tax the discharge, so check your state’s conformity if you’re not sure how it handles PSLF forgiveness.

1
Federal Student Aid. Public Service Loan Forgiveness Buyback
2
eCFR. 34 CFR 685.219
3
MOHELA. Public Service Loan Forgiveness (PSLF) Information – Section: Public Service Loan Forgiveness (PSLF) Buyback
4
Consumer Financial Protection Bureau. How Do I Certify That I Work for a Qualified Employer in Order to Qualify for Public Service Loan Forgiveness
5
National Association of Student Financial Aid Administrators. PSLF Buyback Program: A Way to Have SAVE Plan Forbearance Months Counted Towards Loan Forgiveness
6
Federal Student Aid. Public Service Loan Forgiveness Reconsideration
7
Office of the Law Revision Counsel. 26 USC 108 – Income From Discharge of Indebtedness