Legal complications have introduced new hurdles for Public Service Loan Forgiveness (PSLF) borrowers navigating the process of loan repayment. Amidst two legal cases, the Department of Education put loans held by these borrowers into forbearance this month, causing confusion for many who were working toward loan forgiveness under the Saving on a Valuable Education (SAVE) plan.
This plan, at the heart of the legal disputes, sought to make repayment more accessible for borrowers; but a judge's recent decision to block it until a final court decision could cause serious delays for those nearing loan forgiveness. Borrowers have voiced their frustration, claiming the temporary forbearance effectively halts their progress toward loan forgiveness.
However, the Department of Education has outlined several alternative paths for affected borrowers. People who have maintained qualifying employment for 10 years and still carry an outstanding balance are eligible to 'buy back' months of PSLF credit lost during the forbearance period. After submitting a request, these borrowers will receive a 'buyback agreement', detailing the amount not paid while in forbearance. They will then have 90 days to pay this amount and, effectively, regain lost progress.
While this 'buyback' option can potentially solve many borrowers' problems, it does demand a proactive approach. Borrowers will need to initiate the process, keep track of missed payments, and complete it within the specified timeframe. Alternatively, the Department of Education has also suggested enrolling in other income-driven repayment plans such as the Revised Pay As You Earn (REPAYE) plan. However, current servicing platform changes complicate this and it's unclear whether REPAYE is a viable option.
For now, experts advise borrowers to carefully document their forbearance period and consider the potential financial impact of different outcomes, including the striking down of the SAVE plan or a change in administration.