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FACT SHEET: Income-Driven Repayment Plans

Sen. John Kerry delivers the commencement address at UMass Boston Friday, May 29, 2009.

CREDIT: AP/Lisa Poole.

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What Are Income-Driven Repayment Plans?

Income-driven repayment plans are designed to keep federal student loan borrowers’ monthly payments low and affordable. Monthly payments are adjusted each year based on changes to annual income and family size.

What Is Income-Based Repayment (IBR), Pay As You Earn (PAYE), And Revised Pay As You Earn (REPAYE)?

These programs are specific income-driven repayment plans under the Federal Direct Loan program.

Screen Shot 2016-04-22 at 10.56.53 AM What Is Public Service Loan Forgiveness?

Public Service Loan Forgiveness (PSLF) is a program you can enroll in regardless of what income-driven repayment plan you choose. If you are a public service employee and enroll in PSLF, after 10 years of public service (120 qualifying monthly loan payments), your loans will be forgiven. For more information talk to your loan servicer or visit studentaid.ed.gov.

Which Loans Are Eligible For IBR, PAYE, And REPAYE?

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How Can I Qualify For Income-Based Repayment?

  • Your federal student Direct and FFEL loan debt must be high relative to your income.
    • Use the Department of Education’s calculator at studentaid.ed.gov to see if you qualify. The calculator considers your family size, income, and state of residence to find your new monthly payment under IBR.

How Can I Qualify For Pay As You Earn?

  • You had no outstanding balance on a Federal Direct Loan or a Federal Family Education Loan (FFEL) on October 1, 2007 and took a new loan on or after October 1, 2011.
  • Your federal student Direct loan debt must be high relative to your income.
    • Use the Department of Education’s calculator at studentaid.ed.gov to see if you qualify. The calculator considers your family size, income, and state of residence to find your new monthly payment under PAYE.

How Can I Qualify For Revised Pay As You Earn?

  • You are a Direct Loan borrower with a eligible loans (listed above).

How To Enroll in IBR, PAYE, Or REPAYE

For more information and to enroll in IBR, PAYE, or REPAYE, contact the servicer of your student loan. To find your servicer, visit nslds.ed.gov.

When making your repayment plan choices, remember:

  • You may pay more interest. At any given interest rate, the faster you pay your loans, the less you pay in interest. Because REPAYE, PAYE and IBR may extend your repayment period, you may pay more total interest on the loan.
  • You must submit annual documentation. To set your payment amount each year, your loan servicer needs updated information about your income and family size. If you do not submit your documentation, you’ll pay the amount you would be required under a 10-year standard plan.

SOURCES
Federal Student Aid: Repayment Plans: https://studentaid.ed.gov/sa/repay-loans/understand/plans
Federal Student Aid: Income-Driven Repayment Plans: https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven

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