How are PSLF repo amounts calculated?

The Public Service Loan Buyback Program (PSLF) allows federal student loan borrowers to “buy back” eligible months toward PSLF that were previously ineligible due to deferment or forbearance. The goal is to allow borrowers to make up for lost time toward forgiveness for legitimate reasons such as certain deferrals or administrative errors (such as existing savings tolerances).

A “buyback” is a way to bridge the gap by paying the amount that would have been charged if you were on an eligible payment plan during those months. The calculation is based on what you have a minimumIDR payment It could have been adjusted at that time to suit your income, family size, and loan type.

However, the rules differ whether the deferment or grace period is short (less than a year), or longer (more than a year). For borrowers in the SAVE forbearance period specifically, it has been running since July 2024, more than a year – so different rules will apply.

How is the PSLF buyback amount calculated?

the Education Department (ED) It uses a set of rules that depend on how long the deferment or forbearance lasts and whether you are in an income-driven repayment (IDR) plan before or after that period.

1. If the suspension period is less than 12 months

For short periods (less than a year) the calculation is straightforward. The ED looks at your payment under the lowest legal payment plan (eg pay, Pushor IBR) Immediately before and after postponement or forbearance. They will then use it minimum Of these two amounts as a monthly payment to your buyback account. Remember, since SAVE is no longer a “legal” payment plan, it will not be used.

example:

Let’s say you were in a savings plan before going into a four-month forbearance in 2024. Your savings payment before the pause was $110 per month. You placed your buyback order in November 2024. Your buyback will be calculated at the payment amount during that period. That would make your buyback $310 per month, so Your total buyback will be $1,240.

2. If the suspension period is 12 months or more

For longer postponements or deadlines, the process becomes more individualized. Borrowers must submit tax returns and family size information for each calendar year covered by the deferment or forbearance.

ED uses this information to determine the amount you would have paid under Lowest IDR plan available for that period. Income data from your tax return, along with your family size, is used to estimate your discretionary income – the basis for IDR payment calculations.

If your tolerance exceeds multiple tax years, the ED department requests tax documentation for each of those years to ensure accuracy.

For periods:

• July 2024 – June 2025: Make payment using your savings plan information
• July 2025 – June 2026: Lowest legally permitted repayment plan based on your 2024 income (likely IBR or PAYE)
• July 2026 – June 2027: The lowest legally permitted repayment plan based on your 2025 income (such as IBR or RAP)

example:

Imagine you have a 20-month deferral spanning 2024-2025. Your adjusted gross income (AGI) for 2024 $60,000and the AGI for 2025 decreased to $55,000. Your family size was three in both years. ED will calculate your repo payments separately for each year based on those AGIs – using the lower monthly IDR payment for each individual period.

If the standard 10-year plan payment for your loan is less than the calculated IDR amount, ED will use this standard payment instead.

3. If you were not in an IDR plan before or after the pause

Borrowers who were not enrolled in an IDR plan before or after their deferment must submit income statements so ED can estimate their payments. It would have been On IDR plan. Without tax information or family size information, management defaults to the standard 10-year payment plan, which is often higher than the IDR-based amounts.

4. If you do not file taxes within the period

If you are not required to file a tax return during the months you repurchase, you will need to provide a signed statement confirming that fact. You will also need to include your file Family size for that time period.

Without these documents, management automatically sets the standard plan payment for 10 years, which can significantly increase the cost of the buyback.

Should you keep waiting in the save?

The SAVE forbearance may last until June 2028 due to ongoing litigation and OBBBA rules. But staying patient longer does not make the PSLF buyback cheaper, nor does it add to the PSLF balance.

For buyback purposes, what matters is the duration of the deferment/forbearance: if it is less than 12 months, ED uses the lower of your IDR payments from before or after the forbearance (for earlier periods, this could mean your REPAYE payment amount).

Since the toleration period for SAVE has already exceeded 12 months, ED requires it Tax returns and family size For each affected year the repurchase process is based on Lowest payment plan You are eligible for in those months. If you do not submit documents within 30 days, the standard payment will be used for 10 years.

Waiting in the SAVE forbearance period will likely delay progress toward PSLF without reducing cost. In fact, if you’re not saving each month for that larger total amount, it may prevent you from using this option.

What happens next

For anyone considering a PSLF buyback, the basic steps are:

1. Confirm eligibility. You must be working (and certified) in an eligible public service position and have eligible Direct Loans.
2. Review your loan history. Identify the months that were in deferment or forbearance that can be counted toward the buyback. For many borrowers, this is the patience to save.
3. Collect documents. Make sure you get your tax returns for each covered year and note your family size for each period.
4. Send information instantly. Respond to the emergency department or your provider within 30 days to avoid being assessed at the standard rate.

Don’t forget that the PSLF buyback timeline is over a year…so it may be a “hurry up and wait” situation.

The PSLF repo program provides a way for public service borrowers to recover time lost for forgiveness, but understanding the trade-offs of the program is important.

Whether your pause is a few months or several years, understanding how your IDR payments are calculated can help you plan when to catch up those months.

Don’t miss these other stories: