PSLF Buyback

PSLF Buyback is a relatively new process that lets you "buy back" qualifying PSLF months for past periods of forbearance or deferment that wouldn't have counted under normal rules. It's narrow, useful, and not well understood.

What it does

Normally, months spent in forbearance or deferment don't count toward the 120 qualifying payments you need for PSLF. The buyback option lets you pay the Department of Education a one-time amount equal to what you would have paid under an income-driven plan during those months, in exchange for those months counting toward your PSLF total.

Who qualifies for the buyback option

• You must have at least 120 months of qualifying employment at PSLF-qualifying employers
• You must already have an approved PSLF application or be close to one
• The months you want to buy back must be months you spent in forbearance or deferment
• The buyback only matters if buying back the months would push you to (or past) 120 qualifying payments

What it costs

The buyback amount is calculated based on what your monthly payment would have been under SAVE, PAYE, or IBR during those forbearance/deferment months, given your income at the time. For many low-income periods, the buyback can be surprisingly cheap — sometimes only a few hundred dollars to recover a year of qualifying credit.

How to do it

You request a buyback after your PSLF application has been processed and the Department has identified how many qualifying months you have. They'll send you a buyback offer in writing showing the amount, the months you'd recover, and the deadline to accept.

The strategist's view

Buyback is one of the more valuable tools to land in federal student aid in recent years, but the math only works for a narrow set of borrowers. Don't pre-emptively pay for months you might not need; wait until your PSLF certification is processed and you know exactly where you stand.