Trump Administration Policy Shift Increases Costs for Public Service Loan Forgiveness

Public servants seeking student loan forgiveness through the Public Service Loan Forgiveness (PSLF) program face higher costs due to a policy shift by the Trump administration. The change specifically impacts the 'buyback' option, which allows eligible borrowers to pay for missed months of qualifying employment to accelerate their path to debt cancellation. The Department of Education has announced it will no longer utilize the Saving on a Valuable Education (SAVE) plan to calculate buyback offers for deferments or forbearances occurring on or after July 1, 2024. The SAVE plan, which was blocked by a federal appeals court in March, offered significantly lower monthly payments—as low as 5% of discretionary income—compared to other repayment options. Under the current shift, borrowers may be subject to the Income-Based Repayment (IBR) plan, where payments typically start at 10% of discretionary income and can rise to 15% for certain older loans. This change could lead to substantially higher lump-sum bills; in some cases, the required payments may become financially unfeasible for the borrower. The policy change comes as the agency struggles with a significant backlog, with over 88,000 borrowers currently awaiting decisions on their applications. As of December, approximately 7.2 million individuals remained in the SAVE program, many of whom have been in administrative forbearance since the summer of 2024 while legal challenges proceeded.