The “Revised Pay as You Earn” -based repayment plan (REPAYE) is an income-driven federal student loan repayment plan (revised as of December 2015 from the initial Pay as You Earn PAYE Plan) that sets the borrower’s monthly student loan payment at an affordable amount based on the borrower’s income and family size.
REPAYE is virtually the same as the initial PAYE plan but eliminated certain date restrictions.
What Federal Student Loans Are Eligible for REPAYE?
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans made to graduate or professional students
- Direct Consolidation Loans that did not repay any PLUS loans made to parents
- Subsidized Federal Stafford Loans (from the FFEL Program)
- Unsubsidized Federal Stafford Loans (from the FFEL Program) – Eligible if consolidated*
- FFEL PLUS Loans made to graduate or professional students – Eligible if consolidated*
- FFEL Consolidation Loans that did not repay any PLUS loans made to parents- Eligible if consolidated*
- Federal Perkins Loans – Eligible if consolidated*[i]
Only federal student loans can be repaid under the REPAYE. Private student loans are not eligible.
REPAYE is not available for Parent PLUS loans or Consolidation loans that include Parent PLUS loans.
How are Monthly Payments Payment Amounts Calculated?
Under REPAYE, the monthly payment is based upon 10 percent of the borrower’s discretionary income, but never more than the 10-year Standard Repayment Plan amount.
How Long is the REPAYE Plan?
20 years if all loans the borrower is repaying under the plan were received for undergraduate study.
25 years if any loans the borrower is repaying under the plan were received for graduate or professional study
REPAYE Plan Loan Forgiveness
If the borrower is making payments under REPAYE and also working toward loan forgiveness under the Public Service Loan Forgiveness (PSLF) Program, the borrower may qualify for forgiveness of any remaining loan balance after only 10-years of qualifying payments, instead the 20-year payment plan.
Will Payment Remain the Same Amount for the Life of the Income-Driven Repayment Plan?
No, under REPAYE the borrower is required “recertify” his or her income and family size each year. This means that the borrower must provide the loan servicer with updated income and family size information so that the loan servicer can recalculate the REPAYE eligibility and payment amount. The borrower must do this even if there has been no change in income or family size.
Although recertification is only required once each year, if the borrower income or family size changes significantly before the annual certification date (for example, due to loss of employment), the borrower can submit updated information and ask the loan servicer to recalculate the payment amount at any time. The borrower is not required to report changes in his or her financial circumstances before the annual recertification date. The borrower can wait until the recertification date to report an increase income.
If the borrower does not recertify under the REPAYE Plan by the annual deadline, he or she will be removed from the REPAYE Plan and placed on an alternative repayment plan. Under this alternative repayment plan, the borrower’s required monthly payment is not based on income. Instead, the payment will be the amount necessary to repay the loan in full by the earlier of (a) 10 years from the date repayment begins under the alternative repayment plan, or (b) the ending date of the 20- or 25-year REPAYE Plan repayment period. The borrower may choose to leave the alternative repayment plan and repay under any other repayment plan for which the borrower is eligible.
Eligibility for REPAYE
Any borrower with eligible federal student loans can make payments under REPAYE. REPAYE has an eligibility requirement the borrower must meet to qualify for the plan. To qualify, the payment the borrower would be required to make under the REPAYE plan (based on income and family size) must be less than what the borrower would pay under the Standard Repayment Plan with a 10-year repayment period.
If the amount was more than the 10-year Standard Repayment Plan, there would be no benefit from having the monthly payment amount based on income and so the borrower would not qualify.
Generally, the borrower will meet this requirement if his
or her federal student loan debt is higher than his or her annual discretionary
income or represents a significant portion of that annual income.
[i] *“eligible if consolidated,” means that if the borrower consolidates that loan type into a Direct Consolidation Loan, the borrower can then repay the consolidation loan under the income-driven plan. However, if the borrower consolidates a FFEL Program Loan or Federal Perkins Loan into a Direct Consolidation Loan, the borrower may then be able to repay the Direct Consolidation Loan under the REPAYE, PAYE, and ICR Plan (depending on the type of loan consolidated).