Bipartisan Bill Proposes Counting SAVE Forbearance Toward PSLF
Legislation would eliminate buyback requirements for public service loan forgiveness.
1Key provisions of the bill
The Public Service Loan Forgiveness Inclusion Act of 2026 would count payments under graduated, extended, and new tiered standard plans during borrowers' first 60 months. It would also treat months spent in administrative forbearance as qualifying payments for public service workers. The bill was introduced with nine cosponsors and referred to the House Committee on Education and Workforce. This addresses current issues where borrowers lose PSLF credit for being in 'wrong' repayment plans or forbearance periods.
2Impact on SAVE forbearance borrowers
Approximately 7 million borrowers who spent over two years in SAVE forbearance would benefit. Currently, these months earn zero PSLF credit unless bought back. The bill would automatically count these months without requiring lump-sum payments or applications. SAVE forbearance began in July 2024 when courts blocked the plan, and public servants who stayed in it lost more than 24 months toward the required 120 payments for PSLF, with interest accruing since August 2025.
3Current buyback challenges
The existing PSLF Buyback program requires 120 months of certified employment before application, a lump-sum payment based on income-driven plan amounts, and typically takes 20-24 months to process. After a court settlement barred using REPAYE for calculations, buyback amounts shifted to the older IBR formula, resulting in higher payments for pre-2014 loans. A borrower buying back 24 months at $300/month would owe $7,200 upfront. The bill would eliminate this requirement for documented public service months.
4Changes to repayment plan rules
The bill modifies the definition of 'monthly payment' to include periods of administrative forbearance for public service workers. For the first 60 payments, it drops the requirement that graduated/extended payments must meet the 10-year standard amount. From month 61 onward, existing rules return. This helps borrowers currently losing PSLF credit for being on extended or graduated plans that were never eligible under current law.
5Inclusion of tiered standard plan
The legislation adds the tiered standard plan (created for loans issued after July 2026) to PSLF-eligible plans. Currently, this plan with repayment terms of 10-25 years based on balance provides no forgiveness credit. The Department of Education would have 180 days post-enactment to notify all Direct Loan borrowers about changes and explain plan-switching procedures.
6Unresolved questions
The bill doesn't clarify whether forbearance months occurring before enactment would count retroactively, though the amended definition suggests they might. It also doesn't address handling of the 88,000 pending buyback requests. These issues would likely require Department rulemaking or court clarification. Borrowers shouldn't assume retroactive application until official guidance is issued.
7Context of PSLF challenges
While over 1 million borrowers have received PSLF forgiveness, 97% of early applicants were denied. About 120,000 borrowers annually are now on track for forgiveness. The 'wrong-payment plan' problem persists, with borrowers losing months for being on ineligible extended/graduated plans. Temporary Expanded PSLF (TEPSLF) helps but may exhaust funds in 2-3 years. This bill would restore credit for those under 60 payments.
8Legislative outlook
This is Foster's sixth attempt at such legislation, but the first to directly address administrative forbearance. It has support from teachers' and education groups. Key indicators include whether the Education Committee schedules a hearing before January 2027. Without action, the bill dies. Meanwhile, SAVE borrowers face exit notice deadlines from September 2026 to March 2027.