In October 2023, the Department of education has come out with a new wrinkle that may help a few borrowers who
have been waiting for Public Service Loan Forgiveness (PSLF) for their student loans. Broadly, PSLF wipes out
student loan balances for borrowers who have done full time work for a non-profit employer for a total of ten years
(that is, 120 months).
Borrowers who are getting close to the 120 month threshold may now buy back months in which they were ruled
ineligible due to a deferment or a forbearance, and qualify for immediate forgiveness.
For instance, a borrower with 118 months of qualifying service time, but whose loans were in deferment for three (3)
months during the payback period can now make a one-time payment equal to 2 loan payments and get immediate
forgiveness of the remaining balance.
Of course, as with most student loan programs, there’s oodles of paperwork and complications involved. To start with,
you need to have a Direct federal loan with a positive balance, 120 or more months of payments while certified as
working for a qualified non-profit employer (including months where no payment was made due to deferment or
forbearance, and at least one month where their was a deferment or forbearance.
BUT, you won’t qualify for this if you still fall sort of the 120 total months requirement, or have only non-direct
loans such as FFEL or Perkins loans. It may also be tough to qualify if you have already consolidated your loans;
deferment months that occurred when the original loans were in place can’t be bought back.
Also, months where you were in school, in a grace period, in default, in bankruptcy, or being monitored for a
disability claim don’t count.
If you apply for the buy back program and are accepted, the DOE will ask you to sign a buy back agreement, calculate
the amount due, and give you ninety (90) days to make the payment. Do that, and the forgivness should be automatic.