Ten years of teaching, nursing, or serving your community should count for something when it comes to student loan forgiveness. For thousands of public service workers, that decade of sacrifice was supposed to end with their remaining federal student loan balance wiped clean under a program Congress created in 2007.
But a recent policy change from the Education Department has rewritten the math on how much you will owe to reach that finish line. The update landed quietly, buried in revised calculation rules, and many of the 88,000 people it directly affects have not yet been told what it means for their finances.
If you are pursuing Public Service Loan Forgiveness and have been counting on the buyback option to close the gap on your payments, the number on your next offer letter could be two to three times higher than you planned for.
The buyback formula changed, and borrowers are paying the price
The PSLF Buyback program lets borrowers who missed payments during deferment or forbearance retroactively purchase those months by paying a lump sum. Each purchased month counts toward the 120 qualifying payments required for full loan forgiveness under the program.
The SAVE plan calculated monthly payments based on just 5% of your discretionary income for undergraduate loans and 10% for graduate loans, making it the most affordable repayment option for federal borrowers.
The Education Department will no longer use that formula for buyback calculations, even for borrowers involuntarily placed into SAVE forbearance when courts blocked the plan in 2024.
“This is another time where the individual borrower is stuck in the middle of politics. Borrowers who switched to the SAVE repayment plan were in forbearance status for almost two years, not making payments while the politicians battled it out.”— Drew Powers, (Founder, Powers Financial Group LLC, Registered Investment Advisor)
Buyback amounts will now be calculated using the Income-Based Repayment plan, which takes 10% of discretionary income or 15% for borrowers with older loans. A borrower who would have owed roughly $4,300 under the SAVE formula could now face a bill closer to $12,800 under IBR, according to Student Loan Sherpa.
Over 88,000 borrowers are trapped in a growing application backlog
This policy shift arrives at the worst possible moment for borrowers who have already been waiting months for the department to process their applications. More than 88,000 borrowers have pending buyback requests, and that number has climbed steadily since mid-2024, according to federal court records reported by CNBC.
Roughly 7.2 million borrowers remained enrolled in the SAVE plan as of December 2025, according to the U.S. Department of Education. Many have been in administrative forbearance since July 2024, unable to make qualifying payments or earn credit toward forgiveness.
Some borrowers applied for buyback over a year ago and have still not received any response from the department. “At this time, no one on our team has seen a successful buyback request completed,” Carolina Rodriguez, director of the Education Debt Consumer Assistance Program in New York City, told CNBC.
Iryna Imago/Getty Images
Higher buyback costs could push loan forgiveness out of reach entirely
The core problem is straightforward but financially devastating for borrowers earning modest public service salaries. When the SAVE plan was the basis for buyback calculations, the lump-sum amounts were manageable for most teachers, nurses, and government workers.
Switching the calculation to IBR can double or triple the total amount you must pay upfront for those missed months to be counted toward forgiveness. One EDCAP client would have owed approximately $30,000 in payments under the IBR plan, based on his income, which would have made a buyback financially impossible.
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“Coming up with high payments may possibly prevent people from using buyback, or them having to dip into savings or even borrow from family or friends to pay for it,” Rodriguez told CNBC. Many of these borrowers chose lower-paying careers specifically because of the promise that their student loan balances would eventually be forgiven after a decade.
Teachers, social workers, and nurses accepted reduced compensation throughout their careers in exchange for eventual debt relief. Raising the cost of buyback undermines the fundamental bargain that drew them into public service in the first place.
New eligibility restrictions add more uncertainty for public service workers
Congress created PSLF in 2007, and the Trump administration does not have the authority to eliminate the program outright. Your remaining federal student loan balance is cancelled after 120 qualifying monthly payments made while working full-time for an eligible government agency or nonprofit employer, according to Federal Student Aid.
Final regulations published on October 30, 2025, take effect on July 1, 2026, and give the department authority to disqualify employers found to have a “substantial illegal purpose.” Multiple lawsuits from state attorneys general and the American Federation of Teachers are challenging these changes, according to NPR.
The collapse of the SAVE plan is forcing borrowers into costlier repayment options
The end of the SAVE plan is the backdrop for every challenge you face as a borrower right now. A federal appeals court officially blocked the plan in March 2026, and the Education Department has directed all 7.5 million enrolled borrowers to exit and choose a new repayment plan within 90 days of receiving notice from their servicer.
If you do not select a new plan within that window, you will be automatically enrolled in the Standard Repayment Plan or the new Tiered Standard Plan. The new Repayment Assistance Plan (RAP) launches on July 1 and calculates payments at 1% to 10% of your adjusted gross income, with forgiveness after 30 years.
Steps you should take before the July 1 deadline reshapes your options
With the deadline approaching, taking the right steps now is critical.
Key actions for borrowers pursuing PSLF
- Log in to StudentAid.gov and your loan servicer’s website today: Verify your payment count, employment certification status, and contact information are current and accurate before the July 1 transition date.
- Switch out of the SAVE plan immediately: Every month you remain in SAVE forbearance is a month you are not earning credit toward your 120 qualifying payments, and that lost time cannot be recovered automatically.
- Apply for buyback even though costs are higher: “Although buyback offers are likely to be pricier now, it doesn’t hurt to apply for them and have the option,” higher education expert Mark Kantrowitz told CNBC.
- Compare buyback costs against continuing monthly payments: If your calculated monthly payments under a qualifying plan are lower than the buyback lump sum, making regular payments until you hit 120 could save you thousands over time.
- Consolidate your loans before July 1, 2026, if you plan to: Consolidating after that date locks you out of legacy income-driven plans like IBR, PAYE, and ICR, leaving RAP as your only income-driven option.
- Explore deferment if payments are currently unaffordable: Unemployment deferment and economic hardship deferment may provide temporary relief while you assess your strategy without derailing your forgiveness timeline.
The bottom line for borrowers counting on public service loan forgiveness
PSLF is not disappearing, but the path to forgiveness is getting more expensive and uncertain with each policy change from the Education Department. If you have been working in public service and counting on this program, the worst thing you can do is wait for clarity that may never come.
“The last few years have been the most chaotic time in the student loan industry, which has made things more difficult for borrowers,” Betsy Mayotte, president of The Institute of Student Loan Advisors, told Mirror Indy. Her nonprofit offers free guidance at tisla@freestudentloanadvice.org for borrowers navigating repayment decisions.
You earned your years of service, and you deserve a clear path to the relief you were promised. Review your accounts, understand the new buyback cost structure, and take control of your repayment strategy before July 1.
Related: The biggest change to student loans in 45 years is here