REPAYE: How it Works and Who it’s For

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If you’re struggling to keep up with your monthly student loan payments, the Revised Pay As You Earn plan (REPAYE) might help. This plan limits your payment each month based on your income.

Based on how payments are calculated, REPAYE is best for:

• Single borrowers (not married)
• Borrowers with Federal Direct Loans
• Borrowers with no graduate student debt

In this post:

• How REPAYE works
• How REPAYE compares to other income-driven plans
• When REPAYE might make sense for you
• How to apply for REPAYE
• What you can do if you don’t qualify for REPAYE

How REPAYE works

REPAYE puts a cap on your monthly federal student loan payments at 10% of your discretionary income. This number is based on your adjusted gross income (AGI), family size, and total student loan balance.

Under this plan, if you haven’t paid off your loans after 20 or 25 years, your remaining balance can be forgiven. Because your monthly payment is based on your income, you could also pay off your debt a bit earlier.

If you’re married, your spouse’s income and student loans are considered when calculating your discretionary income. That can make your payment a lot higher than it is if you’re single. REPAYE can also lead to a situation where your payments are less than your monthly interest, which may lead to a growing loan balance instead of a shrinking one.

How REPAYE compares to other income-driven plans

If you’re interested in income-driven repayment and REPAYE doesn’t look like a great choice, you can also consider another IDR plan like Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), or Paye As You Earn (PAYE).

	REPAYE	IBR	ICR	PAYE
Repayment length	No more than 20 or 25 years	No more than 25 years	No more than 25 years	No more than 20 years
Payment amounts	10% of discretionary income	15% of discretionary income	20% of discretionary income	10% of discretionary income
Who it’s best for	Borrowers looking for a lower monthly payment	Federal Family Education Loan Program (FFELP) borrowers	Available to Parent PLUS Loan borrowers	Borrowers with graduate student loans
To qualify	Must have Federal Direct Loans	FFEL Program and Direct Loans	Must have Federal Direct Loans	Direct Loan borrowers since Oct. 1, 2007

When REPAYE might make sense for you

REPAYE is the best repayment plan for many student loan borrowers. It has wide qualification requirements, gives you the lowest payment, and results in forgiveness for the remainder of your balance after 20 years if you only have undergraduate loans.

REPAYE could make sense in these scenarios:

• You’re single and have a low income and high monthly payments
• You’re married and both you and your spouse have large student loans
• You have student loans that don’t qualify for other income-driven repayment plans due to the origination or disbursement date
• You have any type of Federal Direct Loan and want the lowest monthly payment possible
• You’re willing to pay for your loans over a longer period of time to get a lower monthly payment

How to apply for REPAYE

Applying for REPAYE is easy. The best way to apply for most people is online at the StudentLoans.gov website.

Here’s how to apply for REPAYE apply online:

1. Go to the IDR plan application page
2. Scroll down to the section for new applicants or returning applicants
3. Click the button to log in and start your application
4. Log in with your FSA ID and password (the same login you used when completing the FAFSA)
5. Enter your personal information including details on your family size, employment, and marital status
6. Connect your application to your IRS tax return to import your adjusted gross income (AGI) and other required financial details from your taxes
7. Select the REPAYE option if eligible
8. Enter your personal contact information
9. Review everything for accuracy, sign, and submit your application

You can also get a PDF version of the paper application to mail in if you prefer.

What you can do if you don’t qualify for REPAYE

Some borrowers don’t qualify for REPAYE. If you don’t qualify and want an income-driven repayment plan, start the application process the same as you would for REPAYE. When you get to the end of the financial section, you will be presented with other options based on your loans and income.

If you have good credit, you might be able to save money by refinancing your student loans to get a lower interest rate. Those loans don’t end with forgiveness after 20 or 25 years, so do the math and weigh out the pros and cons to decide what makes the most sense for you.

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