New “buyback” student loan forgiveness program can help you get debt relief sooner

The Community Service Loan Forgiveness Program helps eligible teachers and government employees eliminate their student loan balances after working in the field for 10 years and making 120 qualified monthly loan payments. However, some PSLF borrowers who should have received forgiveness last year may have been thwarted by administrative payment breaks.

To help the PSLF Redemption Program offers an opportunity for eligible borrowers in the PSLF program to “buy back” unpaid months that were not counted toward forgiveness while their loans were in forbearance or forbearance.

The buyback option can help some borrowers get debt relief sooner, but it’s not a shortcut to speeding your progress toward PSLF, said Elaine Rubindirector of corporate communications in Edvisors.com. You will need to have reached ten years of service and meet other requirements to qualify. If you’re only five years into your teaching position, for example, you can’t use this program to pay off your remaining five years of payments to get debt relief now.

Here’s how to find out if you’re eligible for the buyback program and how to apply.

Read more: 6 steps student loan borrowers should take before the White House transition

What is the PSLF Buyback Program?

The PSLF Buyback Program allows you to buy back certain months of missed payments to count as eligible PSLF payments, which would speed up debt cancellation for a small number of eligible borrowers.

For example, if you are a teacher who has worked for 130 months in the role, you have already exceeded the required 10 years to be eligible 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 would mean that you are not yet eligible for PSLF forgiveness.

Under the government’s PSLF buyback program, you can now make a payment (either in one lump sum or through multiple payments) within 90 days to cover the 5 months it takes to meet your obligation and receive debt relief.

How much will you need to redeem? This depends on how many months you have until the 120 goal and how much your monthly payment is. If you were on an income-driven repayment plan, your monthly payment could be as little 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 submit a redemption request, the government will specify the total amount you must pay your servicing agent within 90 days to settle your remaining balance.

Who is eligible for PSLF redemption?

There are several requirements to be eligible for PSLF redemption:

In other words, you cannot request a buyback if you have less than 10 years of service, and buybacks do not apply to delinquent or repaid loans.

You can check eligible PSLF payments at StudentAid.gov, the central dashboard for this program. You can see more detailed information on eligibility requirements here.

How do I apply for the PSLF Buyback Program?

Here they are application steps for the PSLF buyback program:

1. If you have unreported periods of qualifying employment, submit them using PSLF Help Tool.
2. Wait to review how you are doing adjustment of the number of payments applies to PSLF credit.
3. Confirm the missing pay months you want to buy back and make sure you’ve approved qualifying work for the same months (see how to check these months).
4. Submit a redemption request via Revision of PSLF.
5. Wait to hear back from StudentAid.gov about your final payout amount.

Rubin cautions that the app is a bit confusing. “Be patient, but make sure your information is registered,” Rubin said.

You can check the status of your application via StudentAid.gov.

Can I apply for PSLF redemption if I am enrolled in SAVE?

Yes, you can apply for a PSLF buyback if you are enrolled in the Savings on a Valuable Education plan. The SAVE programincome-driven repayment plan, is considered an eligible type of forbearance in PSLF redemptions.

Payments have been on hold 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 buyback program be open?

Rubin said the PSLF buyback program is currently open and there is no strict application deadline.

That being said, once you submit your application and learn the redemption amount, you have 90 days to make the redemption payment to your lender. If you fail to pay the full amount within this time period, you must start over with a new application.

With a new administration in the White House, the long-term fate of the PSLF buyback program is unclear. Rubin recommends taking the time now, while the PSLF buyback is still available, to determine your eligibility and submit your application.