If you are enrolled in Public Service Loan Forgiveness Program and should have received debt relief last year or are expected to hit the 120 salary mark this year, a new program can help you apply for debt relief during Save a payment break.
PSLF offers student loan forgiveness to teachers, nurses and other public service workers who have made 120 qualifying payments — the equivalent of 10 years — while working a qualifying job. On PSLF Redemption Program It offers qualified borrowers the opportunity to “buy back” payment-free months that they did not count as forgiveness while their loans were in forbearance or deferment.
The buyout option can help some borrowers in the PSLF program get debt relief, but it's not a shortcut to speeding up your progress toward PSLF, he said. Elaine Rubindirector of corporate communications at Edvisors.com. You don't need to hit 10 years of service and meet other requirements to qualify. If you only have five years in your teaching position, for example, you can't use this program to pay off the remaining five years of payments to get debt relief now.
Here's how to find out if you're eligible for a buyback program and how to apply.
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What is the PSLF redemption program?
The PSLF Buyback Program allows you to purchase certain payment skip months as qualifying payments under PSLF, which will speed up debt forgiveness for a small number of qualified borrowers.
For example, if you are a teacher who has worked for 130 months in the role, you have already exceeded the required 10 years to be eligible for public loan forgiveness. But if your student loan was in deferment or forbearance for 15 months, you may have only made 115 months of payments. Normally, this would mean that you are not yet eligible for forgiveness under the PSLF program.
Under the government's PSLF buyout program, you can now make a payment (either in one lump sum or through multiple payments) within 90 days to cover the five months it takes to meet your obligation and get debt relief.
How much will you need to buy it? It depends on how many months you fall short of the 120 target and how much your monthly payment is. If you were on an income-driven repayment plan, your monthly payment could be as low as $0, Rubin said. But if your monthly payment is $200 and you've only made 117 payments, you'll need to pay $600 to complete the redemption process.
After you submit a redemption application, the government will detail the total amount you must pay your servicer within 90 days in order to have the remaining balance forgiven.
Who is entitled to redemption of PSLF?
There are several requirements that may qualify for a PSLF redemption:
In other words, you can't request a buyout if you have less than 10 years of service, and the buyout doesn't apply to defaulted or discharged loans.
You can check your qualifying PSLF payments at SudentAID.gov, the central dashboard for this program. You can see more detailed information on eligibility requirements here.
How do I apply for the PSLF buyback program?
Here Application steps About the PSLF redemption program:
- If you have undeclared periods of qualifying employment, submit them using the PSLF Help Tool.
- Wait to review as yours Payment Count Adjustment refers to PSLF credit.
- Confirm the missing pay months you want to recover and make sure you have approved qualifying employment for those months (see how to Confirm these months).
- Submit a redemption request via Rethinking the PSLF.
- Wait to hear from SudentAid.gov about the final payment amount.
Rubin warns that the app is a bit confusing. “Be patient, but make sure your information is submitted,” Rubin said.
You can check the status of your application via Studentid. Gov.
Can I apply for a PSLF redemption if I'm enrolled in savings?
Yes, you can apply for a PSLF redemption if you are enrolled in a valuable education savings plan. On Save programan income-driven repayment plan is considered a qualified type of forbearance under the PSLF buyout.
Payments have been on hold for preservation borrowers since the summer, so if you're a PSLF borrower who would have received debt relief in the fall or winter, you're a prime candidate for the buyout program.
How long will the PSLF redemption program be open?
Rubin said the PSLF buyback program is currently open and there is no hard deadline for applications.
That said, after you submit your application and learn your redemption amount, you have 90 days to make the redemption payment to your loan servicer. If you fail to pay the total amount within that time frame, you need to start a new application.
With a new administration in the White House, the long-term fate of the PSLF buyout program is unclear. Rubin recommends taking the time now, while the PSLF buyout is still available, to determine if you qualify and submit your application.