Pay As You Earn Student Loan Forgiveness (PAYE)

September 21, 2019by Riley Hendrickson0
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Through the Pay As You Earn Student Loan Forgiveness program, also commonly referred to as the PAYE program, applicants who are having a difficult time making their student loan payments may qualify for this program. The Pay As You Earn Student Loan Forgiveness program allows users to make student loan payments as they earn to help make their monthly payments more affordable while still tackling their student loan debt. Read on to see eligibility requirements, award amounts, and the application process for the Pay As You Earn Student Loan Forgiveness program.

Eligibility?

In order to be eligible for the Pay As You Earn Student Loan Forgiveness Program, you must meet the following criteria. As a side note, these requirements are not as specific as you may see in other programs throughout the Student Loan Repayment Assistance Programs we have highlighted on the site. With that being said, we have highlighted a few of the key things to look at when applying for the PAYE program.

  • If you are a new Direct Loan Borrower as of October 1st, 2007, with a disbursement made after October 1st, 2011, you may qualify for the Pay As You Earn Repayment Plan.
  • Most federal student loans are eligible for at least one income-driven repayment plan. If your income is low enough, your payment could be as low as $0 per month.
  • An income-driven repayment plan sets your monthly student loan payment at an amount that is intended to be affordable based on your income and family size. We offer four income-driven repayment plans:
    • Revised Pay As You Earn Repayment Plan (REPAYE Plan)
    • Pay As You Earn Repayment Plan (PAYE Plan)
    • Income-Based Repayment Plan (IBR Plan)
    • Income-Contingent Repayment Plan (ICR Plan)
  • Pay As You Earn us typically capped with a maximum monthly payment of 10 percent of discretionary income, so long as that payment is less than what you would pay under the Standard Repayment Plan. To find out more about the Standard Repayment Plan, click the link above.
  • Your financial hardship will be determined based on income and family size. If you repay your loans for 20 years, then any remaining balance will be forgiven.

For a full breakdown and more information on this program, head over to their official program page.

How is my monthly payment amount calculated under an income-driven repayment plan?

Generally, your payment amount under an income-driven repayment plan is a percentage of your discretionary income. The percentage is different depending on the plan. The chart below shows how payment amounts are determined under each income-driven plan. Depending on your income and family size, you may have no monthly payment at all.

Income-Driven Repayment Plan Payment Amount
REPAYE Plan Generally 10 percent of your discretionary income.
PAYE Plan Generally 10 percent of your discretionary income, but never more than the 10-year Standard Repayment Plan amount
IBR Plan Generally 10 percent of your discretionary income if you’re a new borrower on or after July 1, 2014*, but never more than the 10-year Standard Repayment Plan amount

Generally, 15 percent of your discretionary income if you’re not a new borrower on or after July 1, 2014, but never more than the 10-year Standard Repayment Plan amount

ICR Plan The lesser of the following:

  • 20 percent of your discretionary income or
  • what you would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to your income

*For the IBR Plan, you’re considered a new borrower on or after July 1, 2014, if you had no outstanding balance on a William D. Ford Federal Direct Loan (Direct Loan) Program loan or Federal Family Education Loan (FFEL) Program loan when you received a Direct Loan on or after July 1, 2014. (Because no new FFEL Program loans have been made since June 30, 2010, only Direct Loan borrowers can qualify as new borrowers on or after July 1, 2014.)

How much can I expect to be awarded? 

Through the Pay As You Earn Student Loan Forgiveness Program caps your student loan payments at 10 percent of your discretionary income. After 20 years of repayment, any remaining balance of your student loans could be forgiven.

For a full breakdown of this programs offers, head over to their website.

What loans qualify for this program?

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct Plus Loans made to graduate or professional students
  • Direct Consolidation loans, except those that include a Parent PLUS loan
  • Subsidized or unsubsidized Stafford loans, if consolidated
  • FFEL Plus Loans, if consolidated
  • FFEL Consolidation loans, except those that include a Parent PLUS loan
  • Perkins loans, if consolidated

How do I apply for this repayment program?

In order to apply for the Pay As You Earn Student Loan Forgiveness Program, you will need to go to the official government student loans page and select the income-based repayment program that works best for you. You have a few different options here, however, if you have any additional questions you can contact the Official Federal Student Aid site here.

Questions?

If you still have questions or would like to know more information please reach out to us here or you can go back to the Student Loan Repayment Assistance Programs page.

 

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