The federal student loan landscape has significantly changed in the past few months, particularly concerning the Savings on a Valuable Education (SAVE) plan. The legal challenges to this plan have created uncertainty for many clients pursuing Public Service Loan Forgiveness (PSLF). I wrote about the legal challenges of the SAVE plan last April. There has been some progress since then, and I wanted to provide an update on where things stand and what still remains unknown.

Current Status for Borrowers under the SAVE Plan

For borrowers enrolled in the SAVE plan, the current status is as follows:

• Forbearance Status: Borrowers are in a general forbearance, meaning they are not required to make monthly payments. 
• Interest Accrual: Interest is not accruing during this forbearance period. 
• Credit Toward Forgiveness: Time spent in this forbearance does not count toward Public Service Loan Forgiveness (PSLF) or IDR forgiveness. 

The Department of Education expects servicers to complete the necessary technical updates to begin moving borrowers back into repayment no earlier than September 2025, with first payments due no earlier than December 2025. Income recertification dates for IDR plans have also been pushed back to February 2026 at the earliest. Many experts believe these dates will be pushed back further, but these dates are the current estimate.

Options for SAVE borrowers pursuing PSLF 

• Switch from SAVE to another income-driven repayment plan (ICR, IBR, or PAYE). You can use the loan simulator at studentaid.gov to see what your payments would look like under different plans.
• Apply for the PSLF Buyback program if you would have reached 120 months of on-time payments without the pause. More on this option later.
• Stay on SAVE and wait it out. PSLF Buyback remains an option when your PSLF qualifying payments plus time in forbearance equals 120 payments. If you are waiting it out, we recommend “paying yourself” by saving what your payment would have been into a high-yield savings account (or paying down other high-interest debt) to prepare for higher payments or PSLF Buyback down the road.

The Income-Driven Repayment (IDR) Account adjustment

As of February 2025, the Department of Education completed a one-time IDR account adjustment. This was initiated to give borrowers credit for payments in the past that were not counted due to deferment, forbearance, or when loans were in the wrong repayment status. This adjustment was made for all borrowers, even those who had never enrolled in an IDR plan, bringing many borrowers closer to forgiveness. 

Due to this adjustment, we recommend all borrowers log in to https://studentaid.gov/ and review their updated payment count. An IDR or PSLF payment tracker should be on your dashboard. If payment counts look low, you can submit a new PSLF form through the PSLF Help Tool. With all the changes and uncertainty, we recommend saving screenshots of your payment history and credited PSLF payments in case of website transitions or outages in the future.

PSLF Buyback Program

As previously mentioned, the Department of Education is actively enhancing the PSLF Buyback program. This initiative is designed to allow borrowers who have completed 120 months of qualifying employment to ‘buy back’ periods previously spent in ineligible deferment or forbearance statuses, ensuring those months count toward loan forgiveness. This program could be a significant opportunity for many borrowers. 

PSLF Buyback Eligibility Criteria

To qualify for the PSLF Buyback program, borrowers must meet the following requirements:

• Outstanding Loan Balance: You must still owe on your federal Direct student loans. 
• Qualifying Employment: You must have worked in a qualifying public service job during the months you wish to buy back.
• Eligible Loan Status: The months you wish to buy back must have been in deferment or forbearance and meet specific criteria. 

It’s important to note that certain months are ineligible for buyback, such as those in default, bankruptcy, or during in-school status. Additionally, only Direct Loans are eligible for the PSLF Buyback program.

As always, we are here for you. Please email or call if you want to set up a Zoom videoconference meeting or talk by phone.

Mary McCraw, CFP®

Vice President

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