Federal income-driven repayment plans come in many forms, the Revised Pay as You Earn (REPAYE plan being among them. This student loan repayment program allows you to repay your balances relative to your income.
You will be paying a portion of your discretionary income between 20 and 25 years. Once you complete this period, your remaining student loan balances will be eligible for forgiveness. Here is more information about the REPAYE plan, from what loans are eligible and how to apply for it.
What Loans Are Eligible for the REPAYE Plan?
As a federal income-driven repayment plan, REPAYE covers the following loans:
- Direct Subsidized Stafford Loans
- Direct Unsubsidized Stafford Loans
- Direct PLUS Loans (for graduate or professional students)
- Direct Consolidation Loans (that did not repay any Parent PLUS loans)
Meanwhile, the following loans are ineligible for REPAYE:
- FFEL Loans
- Parent PLUS loans
- Consolidation Loans (that repaid Parent PLUS loans)
- Private loans
How Does the REPAYE Plan Work?
Monthly payments under the REPAYE plan depend on your income and family size. As such, your dues may increase or decrease annually to accommodate any changes to these factors. You must recertify your income and family size every year to maintain your REPAYE payments.
For 20 or 25 years, you will pay 10% of your discretionary income. Discretionary income depends on your Adjusted Gross Income and your state’s poverty guideline. Your spouse’s income may also factor into your monthly payments.
You might wonder how the REPAYE plan is related to the Pay as You Earn (PAYE) plan. Both plans generally follow the same rule of paying 10% of your income. However, you don’t have to prove financial hardship to qualify for the REPAYE plan.
How to Apply for the REPAYE Plan
Applying for the REPAYE plan starts on the Federal Student Aid website. Consider consulting with your loan servicer to determine your options. Generally, the REPAYE application process involves the following steps:
- Log In With Your FSA ID: Be sure to create one if you don’t already have one.
- Select Income-Driven Repayment Plan Request: There will be an option to preview the application form. This way, you can prepare any documents you will need, such as income tax returns.
- Choose REPAYE: Note that you may qualify for more than one program under the income-driven repayment plans. The application platform may also automatically place you under the most affordable plan for you.
- Enter Your Application Details: This information involves your income and family details, including those of your spouse.
So, What Is the Revised Pay as You Earn (REPAYE) Plan?
REPAYE is a federal income-driven repayment plan. It allows borrowers to automatically repay student loans according to their monthly income. This way, you are less likely to miss out on your monthly student loan payments.
Federal student loans are eligible for the REPAYE plan. Some federal student loans may be ineligible unless you consolidate them into a policy that qualifies for this program. Be sure to discuss your case with your loan provider to confirm whether your student loans are eligible for the REPAY plan.