Do you have questions about the different types of income-driven repayment plans?

Get in-depth information about income-driven repayment plans.

Income-Driven Plans Questions and Answers

Our Income-Driven Plans page has basic information and answers to common questions about the four income-driven repayment plans that we offer:

  • 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)

Here you’ll find more detailed questions and answers.

Eligible Borrowers
Eligible Loans
Monthly Payment Amount
Repayment Period and Loan Forgiveness
Married Borrowers
Application Process
Miscellaneous


Eligible Borrowers

Our Income-Driven Plans page has basic information about borrower eligibility for income-driven repayment.

How do I know if I qualify as a new borrower for the PAYE Plan?
Your eligibility depends on when you took out federal student loans. There are two parts to the “new borrower” requirement; and you must meet both parts:

  • First, you must have had no outstanding balance on a Direct Loan or Federal Family Education Loan (FFEL) Program loan when you received a Direct Loan or FFEL Program loan on or after Oct. 1, 2007.
  • Second, you must have received (a) a disbursement of a Direct Subsidized Loan, a Direct Unsubsidized Loan, or a Direct PLUS Loan for students on or after Oct. 1, 2011; or (b) a Direct Consolidation Loan based on an application that was received on or after Oct. 1, 2011.

Note: You can’t consolidate your loans to meet the first part of the “new borrower” requirement for the PAYE Plan (see Example 2 below).

The following examples explain who does or does not qualify as a new borrower for the PAYE Plan:

Example 1
You qualify because you meet both parts of the “new borrower” requirement.

  • You received Subsidized Federal Stafford Loans (loans made under the FFEL Program) in September 2008 and September 2009 and a Direct Subsidized Loan in September 2010.
  • When you received the loan in September 2008, you had no outstanding balance on any other Direct Loans or FFEL Program loans.
  • You then received the first disbursement of another Direct Subsidized Loan in September 2011, and you received the second disbursement of that loan in January 2012.

Because you had no outstanding balance on a Direct Loan or FFEL Program loan at the time you received a FFEL Program loan after Oct. 1, 2007 (that is, at the time you received the Subsidized Federal Stafford Loan in September 2008), and you received a disbursement of a Direct Loan after Oct. 1, 2011, you qualify.

Alternative: You also would qualify if, instead of receiving the Direct Subsidized Loan in September 2011, you applied for a Direct Consolidation Loan on or after Oct. 1, 2011, and consolidated the two Subsidized Federal Stafford Loans you received in September 2008 and September 2009 and the Direct Subsidized Loan you received in September 2010.

Example 2
You do not qualify because you don’t meet the first part of the “new borrower” requirement.

  • You received Subsidized Federal Stafford Loans in September 2006 and September 2007.
  • In January 2012, you returned to school and received a Direct Subsidized Loan. At the time you received this loan, you still had an outstanding balance on the Subsidized Federal Stafford Loans you received in 2006 and 2007.

Because you had an outstanding balance on FFEL Program loans at the time you received a Direct Loan after Oct. 1, 2007, you do not qualify even though you received a disbursement of a Direct Loan after Oct. 1, 2011.

Alternative: If you had repaid the two Subsidized Federal Stafford Loans in full before you received the Direct Subsidized Loan in January 2012, you would have qualified. However, you could not qualify if you consolidated the two Subsidized Federal Stafford Loans after Oct. 1, 2011, because you cannot become eligible for the PAYE Plan by consolidating loans that made you ineligible under the first part of the ”new borrower” requirement.

Note: If you’re not eligible for the PAYE Plan, you could repay your eligible Direct Loans under the REPAYE Plan, which provides some of the same benefits as the PAYE Plan.

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Eligible Loans

Our Income-Driven Plans page has basic information about which loans are eligible for repayment under an income-driven repayment plan.

If I have private education loans, are they counted as part of my student loan debt when my servicer determines my eligibility for the PAYE Plan or the IBR Plan?

No. Only nondefaulted Direct Loans and Federal Family Education Loan (FFEL) Program loans that are eligible for repayment under the PAYE Plan or the IBR Plan are counted as part of your student loan debt for purposes of determining your eligibility. Private education loans (including private consolidation loans that repaid federal student loans) are not counted. Eligible federal student loans that were consolidated into a private consolidation loan are no longer federal loans and are not considered when determining your eligibility for the PAYE and IBR plans.

Note: You lose many of the benefits and consumer protections of federal loans when you consolidate them into a private loan. Find out more about the differences between federal and private student loans.

I want to repay my FFEL Program loans under the IBR Plan and my Direct Loans under the PAYE Plan. Will my loan servicers look only at my FFEL Program loan debt when determining my eligibility for the IBR Plan, and only at my Direct Loan debt when determining my eligibility for the PAYE Plan?

No. If you have both Direct Loans and FFEL Program loans, the 10-year Standard Repayment Plan amount that is used in determining your initial eligibility for the PAYE or IBR plan is based on the total amount of all of your Direct Loans and FFEL Program loans that are eligible for repayment under either the PAYE Plan or the IBR Plan.

If you have both Direct Loans and FFEL Program loans, you could consolidate your FFEL Program loans that are eligible for the IBR Plan into a Direct Consolidation Loan and then repay the consolidation loan under the REPAYE Plan or (if you qualify) the PAYE Plan. This will give you a lower monthly payment amount.

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Monthly Payment Amount

Our Income-Driven Plans page has basic information about how monthly payment amounts are calculated under the different income-driven repayment plans. You can also use our Repayment Estimator to compare estimated monthly payment amounts for all federal student loan repayment plans.

How is the monthly payment amount calculated under the REPAYE, PAYE, and IBR plans?

Under these plans, your required monthly payment is generally a percentage of your discretionary income. For all three plans, your discretionary income is the difference between your adjusted gross income (AGI) and 150 percent of the U.S. Department of Health and Human Services (HHS) Poverty Guideline amount for your family size and state.

Under the REPAYE Plan, your required monthly payment amount is 10 percent of your discretionary income at all times.

Under the PAYE Plan and the IBR Plan, your required monthly payment is a percentage of your discretionary income during any period when you qualify to make payments based on income. The percentage differs depending on the plan.

  • Under the PAYE Plan, your monthly payment is 10 percent of your discretionary income.
  • For the IBR Plan, your monthly payment amount is 10 percent of your discretionary income if you’re a new borrower on or after July 1, 2014. If you’re not a new borrower, your monthly payment amount under the IBR Plan is 15 percent of your discretionary income.

Example

  • You are single and your family size is one. You live in one of the 48 contiguous states or the District of Columbia. Your AGI is $40,000.
  • You have $45,000 in eligible federal student loan debt.
  • 150 percent of the 2018 HHS Poverty Guideline amount for a family of one in the 48 contiguous states and the District of Columbia is $18,210. The difference between your AGI and 150 percent of the Poverty Guideline amount is $21,790. This is your discretionary income.
  • If you’re repaying under the REPAYE Plan, the PAYE Plan, or (if you’re a new borrower) the IBR Plan, the calculation works like this:
    • 10 percent of your discretionary income is $2,179.
    • Dividing this amount by 12 results in a monthly payment of $181.58.
  • If you are repaying under the IBR Plan and you’re not a new borrower, the calculation works like this:
    • 15 percent of your discretionary income is $3,268.50.
    • Dividing this amount by 12 results in a monthly payment of $272.38.

The REPAYE, PAYE, and IBR plan payment amounts shown in the example above compare with a monthly payment amount of $500 under a 10-year Standard Repayment Plan (based on a loan debt amount of $45,000 at an interest rate of 6%).

If the REPAYE, PAYE, or IBR plan amount calculated as described above is less than $5, your required monthly payment amount is zero. If the calculated payment amount is more than $5 but less than $10, your required monthly payment is $10.

How is the monthly payment amount calculated under the ICR Plan?
Under the ICR Plan, your required monthly payment will be the lesser of

  • 20 percent of your discretionary income, or
  • the amount you would pay under a Standard Repayment Plan with a 12-year repayment period, adjusted using a formula that takes your income into account.

For the ICR Plan, your discretionary income is the difference between your AGI and 100 percent of the HHS Poverty Guideline amount for your family size and state. This differs from the standard used for the REPAYE, PAYE, and IBR plans, where discretionary income is based on 150 percent of the Poverty Guideline amount.

Example

  • You are single and your family size is one. You live in one of the 48 contiguous states or the District of Columbia. Your AGI is $40,000.
  • You have $45,000 in Direct Unsubsidized Loan debt.
  • The 2018 HHS Poverty Guideline amount for a family of one in the 48 contiguous states and the District of Columbia is $12,140.
  • The difference between your AGI and the Poverty Guideline amount is $27,860. This is your discretionary income.
  • 20 percent of your discretionary income is $5,572. Dividing this amount by 12 results in a monthly payment amount of $464.33.
  • Based on $45,000 in Direct Unsubsidized Loan debt at an interest rate of 6%, the monthly amount you would pay under a Standard Repayment Plan with a 12-year repayment period, adjusted based on your income (using the formula in effect for 2018) is $368.34.
  • Since the payment amount that takes into account both income and loan debt ($368.34) is less than the monthly payment amount that is equal to 20 percent of your discretionary income ($464.33), your monthly payment under the ICR Plan would be $368.34.

The ICR Plan payment amount shown in the example above compares with a monthly payment amount of $500 under a 10-year Standard Repayment Plan (based on a loan debt amount of $45,000 at an interest rate of 6%).

If your calculated ICR payment amount is greater than $0 but less than $5, your required monthly payment amount is $5.

If I’m repaying under the PAYE or IBR plans and my income increases so that I no longer qualify to make payments based on income, but I stay in the plan and make the 10-year Standard Repayment Plan amount, is it still possible for me to receive loan forgiveness after 20 or 25 years?
Making payments under the PAYE or IBR plan that are not based on income does not disqualify you from receiving loan forgiveness. As long as you remain on the PAYE or IBR plan and you meet the other requirements for loan forgiveness, you will qualify for forgiveness of any loan balance that remains at the end of the 20- or 25-year period. However, if your income remains high and you continue to make the 10-year Standard Repayment Plan payment amount, your loans may be repaid in full before the end of the repayment period.

Do Social Security disability payments count as income for purposes of the income-driven repayment plans?
Social Security disability payments would be counted as income only if they are treated as taxable income and are included as part of your AGI on your federal tax return, in accordance with Internal Revenue Service requirements.

I have loans with different servicers and I want to pay all of my loans under an income-driven repayment plan. How does each servicer determine if I’m eligible? If I qualify, how does each servicer determine my payment amount?
If you have loans with different servicers and you want to repay all of your loans under an income-driven repayment plan, you must apply to each servicer separately, and must check the box on the Income-Driven Repayment Plan Request indicating that you owe eligible loans to more than one loan holder.

If you apply for the PAYE or IBR plan, each servicer will use the total amount of all of your eligible loans—that is, your loans that are eligible to be repaid under the PAYE or IBR plans—to determine whether you are eligible for the plan that you requested, even if some of the loans are with other servicers.

If you’re eligible for the plan you requested, each servicer will first determine your income-driven repayment plan payment amount and then adjust that amount by multiplying it by the percentage of your total outstanding eligible loan debt that is serviced by that servicer.

Example

  • 60 percent of your total outstanding eligible loan debt is with Servicer A and 40 percent is with Servicer B.
  • Your calculated monthly payment amount under the income-driven plan you have requested is $140.
  • You would be required to pay $84 per month (60 percent of $140) to Servicer A and $56 (40 percent of $140) to Servicer B.

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Repayment Period and Loan Forgiveness

Our Income-Driven Plans page has basic information about repayment periods and loan forgiveness under income-driven repayment plans.

I began repaying loans I received for an undergraduate program under REPAYE. I later went to graduate school and received new loans. When I began repaying my graduate student loans under REPAYE, the repayment period for my undergraduate loans changed. Why?
Under the REPAYE Plan, your repayment period varies depending on whether you received all of the loans you’re repaying under REPAYE as an undergraduate student (in which case the repayment period is 20 years) or whether you received any of the loans you’re repaying under REPAYE as a graduate or professional student (in which case the repayment period is 25 years).

In this situation, the repayment period for the loans you received for undergraduate study would be extended from 20 years to 25 years as soon as the first loan you received for graduate study entered repayment. However, time already spent in qualifying repayment on the undergraduate loans would count toward the new 25-year repayment period for those loans.

What does “after 20 or 25 years of qualifying repayment” mean?
This means that you will qualify for forgiveness of any remaining loan balance after you have made the equivalent of 20 or 25 years of qualifying monthly payments, and after at least 20 or 25 years have passed.

Generally, a qualifying monthly payment for any of the income-driven repayment plans is a payment made under

  • any income-driven repayment plan, whether based on your income or the 10-year Standard Repayment Plan amount;
  • the 10-year Standard Repayment Plan; or
  • any other repayment plan, if the payment amount is at least equal to what the payment amount would be under the 10-year Standard Repayment Plan.

For example, if you began repayment under the 10-year Standard Repayment Plan and later changed to one of the income-driven repayment plans, the monthly payments you made under the 10-year Standard Repayment Plan will generally count toward the required 20 or 25 years of qualifying monthly payments for the income-driven repayment plan. Similarly, if you were previously in repayment under one income-driven repayment plan and later switched to a different income-driven repayment plan, payments you made under both plans will generally count toward the required years of qualifying monthly payments for the new plan.

Also, any month that you are in an economic hardship deferment generally counts as the equivalent of a qualifying monthly payment for purposes of the income-driven repayment plans. That is, even though you are not required to make payments on your loans during a deferment, any months spent in an economic hardship deferment while you are repaying under an income-driven repayment plan will generally count toward the required 20 or 25 years of qualifying monthly payments. (Note that months spent in any other type of deferment or months spent in forbearance do not count as the equivalent of qualifying monthly payments.)

Depending on the repayment plan, only payments you made after a certain date or months of economic hardship deferment after a certain date may be counted toward the required 20 or 25 years of qualifying monthly payments. For the ICR Plan, payments made under certain other repayment plans (in addition to those listed above) may also count toward the required 25 years of qualifying monthly payments, depending on when you first entered repayment on your loans. Your loan servicer can provide you with more detailed information about these requirements.

If 20 or 25 years (as applicable) have passed, but you have not made the equivalent of 20 or 25 years of qualifying monthly payments, you would not yet be eligible to receive forgiveness of any remaining loan balance. The example below explains this.

Example

  • You entered repayment under the REPAYE Plan in December 2015.
  • To qualify for forgiveness of any remaining loan balance at the end of the 20-year repayment period, you must have made the equivalent of 20 years of qualifying monthly payments (240 qualifying monthly payments) and 20 years must have elapsed.
  • In 2019, you receive forbearance for 12 months.
  • In 2022, you receive an economic hardship deferment for 12 months.
  • After 20 years have elapsed (December 2035), you have made the equivalent of 19 years of qualifying monthly payments (216 monthly payments under the REPAYE Plan, plus 12 months of economic hardship deferment, for a total of 228 qualifying monthly payments). The 12 months of forbearance do not count toward the required 20 years of qualifying monthly payments. Therefore, you would not qualify for forgiveness of any remaining loan balance until after you have made the equivalent of an additional 12 months of qualifying monthly payments.

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Married Borrowers

Is my spouse’s income included when my servicer determines my eligibility for an income-driven repayment plan or my monthly payment amount?
It depends on the plan and, for some of the plans, how you and your spouse file your federal income tax return.

  • REPAYE Plan

    Your loan servicer will generally use both your income and your spouse's income to calculate your monthly payment amount, regardless of whether you file a joint federal income tax return or separate federal income tax returns.

    However, only your individual income will be used to calculate your monthly payment amount if you are separated from your spouse or are unable to reasonably access your spouse's income. If you filed your last tax return jointly with your spouse, you’ll provide alternative documentation of your income, such as a pay stub. If you filed your last tax return separately from your spouse, you can provide your tax return as documentation of your income.

  • PAYE Plan, IBR Plan, and ICR Plan

    If you and your spouse file separate federal income tax returns, your loan servicer will use only your income when determining whether you qualify for the PAYE Plan or the IBR Plan, and when calculating your monthly payment amount under the PAYE, IBR, or ICR plans.

    If you and your spouse file a joint federal income tax return, your loan servicer will use your joint income when determining your eligibility for the PAYE or IBR plan, and when calculating your payment amount under the PAYE, IBR, or ICR plans. However, only your individual income will be used to calculate your monthly payment amount if you are separated from your spouse or are unable to reasonably access your spouse’s income. In this case, you’ll provide alternative documentation of your income, such as a pay stub.

If my spouse also has federal student loans, how will this affect the determination of my eligibility for an income-driven repayment plan or my monthly payment amount?
This depends on the plan.

  • REPAYE Plan

    Generally, your servicer will automatically adjust your payment amount proportionally, based on each spouse’s share of the total loan debt. For example, if the calculated REPAYE Plan payment amount for you and your spouse (based on your joint income) is $200 and you owe 60 percent of your combined loan debt and your spouse owes 40 percent, your individual REPAYE Plan payment would be $120, and your spouse’s individual REPAYE Plan payment would be $80. If you and your spouse have loans with more than one loan servicer, your payment amounts will be further adjusted.

  • PAYE Plan and IBR Plan

    If you and your spouse file a joint federal income tax return, your servicer will use your combined eligible student loan debt when determining your eligibility for the PAYE Plan or the IBR Plan, and will automatically adjust your payment amount proportionally, based on each spouse’s share of the total loan debt. If you file separate federal income tax returns, only your eligible student loan debt will be used when determining your eligibility for the plan, and there will be no adjustment to your payment amount if your spouse also has eligible loans.

  • ICR Plan

    If your spouse also has eligible Direct Loans, you may choose to repay your loans jointly under the ICR Plan. If you choose to repay your Direct Loans jointly with your spouse under ICR, your servicer will calculate a separate ICR payment for each of you that is proportionate to your individual share of your combined Direct Loan debt.

  • All Income-driven Repayment Plans

    Unless you and your spouse choose the joint repayment option under the ICR Plan, your spouse is not required to request an income-driven repayment plan in order for the adjustments described above to be made. Your spouse may choose a different repayment plan but may need to provide authorization for your loan servicer to access his or her loan information in the National Student Loan Data System (NSLDS®) database.

My spouse and I file separate federal income tax returns. However, we live in a community property state and are required to combine our incomes and split the total amount evenly for federal income tax reporting purposes. If I apply for an income-driven repayment plan, can my loan servicer consider only my individual income when determining my eligibility and payment amount?
Your loan servicer may allow you to submit alternative documentation of your individual income that would be used instead of the adjusted gross income shown on your federal income tax return. Before you submit alternative documentation of your income, check with your loan servicer to see if this option is available.

My spouse and I have a joint consolidation loan. Can we repay the loan under an income-driven plan?
Yes. However, you and your spouse must each request the same income-driven repayment plan. Also, regardless of how you and your spouse file your federal income tax return (jointly or separately), your loan servicer will determine your eligibility and payment amount based on your and your spouse’s combined income and eligible federal student loan debt.

My spouse and I want to consolidate our loans into a single joint consolidation loan and then apply for an income-driven repayment plan. Is this possible?
No. The law no longer allows married borrowers to consolidate their loans into a single joint consolidation loan. If you and your spouse both want to repay your loans under an income-driven repayment plan, you must apply separately.

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Application Process

Our Income-Driven Plans page has basic information about applying for an income-driven repayment plan.

If I’m removed from the REPAYE Plan because I didn’t recertify my income by the annual deadline, is it possible to return to the REPAYE Plan?
You can return to the REPAYE Plan only if you provide your servicer with documentation of your income for the period when you were not on the REPAYE Plan. Depending on how long it has been since you left or were removed from REPAYE, this could be the same income documentation (such as your most recent tax return) that you would normally submit to enter REPAYE, or it could be income documentation from prior years.

Your servicer will then calculate what your monthly payment amount would have been under the REPAYE Plan during that period, and will compare this amount to your monthly payment amount under the alternative repayment plan (or any other plan) over the same period.

If the amount you would have been required to pay under the REPAYE Plan is more than what your monthly payment amount was under the alternative plan or another plan during this period, your new REPAYE Plan payment amount will be increased. The amount of the increase will be equal to the difference between what you were required to pay during the period when you were not on the REPAYE Plan, and the amount you would have been required to pay if you had remained on the REPAYE Plan, divided by the number of months remaining in your 20- or 25-year repayment period.

For example:

  • You received loans for undergraduate study and begin repaying those loans under the REPAYE Plan when they first enter repayment. Because all of the loans you are repaying under REPAYE were received for undergraduate study, your repayment period is set at 20 years.
  • After your first year of repayment under the REPAYE Plan, you do not recertify your income.
  • Starting with year two of repayment, you are placed on the alternative repayment plan. Your repayment period is set at 10 years, because 10 years is less time than the remaining portion (19 years) of your REPAYE Plan repayment period.
  • Your payment amount under the alternative repayment plan is $200 per month, and you pay this amount for 12 months.
  • You decide to reenter REPAYE and provide the necessary documentation to your loan servicer. Your loan servicer determines that your REPAYE payment amount for the past year would have been $300 per month.
  • You paid $1,200 less over the course of the year under the alternative repayment plan than you would have paid during the same period under the REPAYE Plan.
  • When you reenter REPAYE, you will have 18 years of your repayment period remaining, so the $1,200 is divided by 216 (there are 216 months in 18 years), which equals $5.55 per month. This amount will be added to your payment amount each month that you remain in REPAYE.
  • Your payment amount under REPAYE for the upcoming year (based on newer income documentation) will be $150 per month.
  • After the increase is added in, your total REPAYE payment will be $155.55 per month for the next year.

I understand that I must report my family size when I first apply for an income-driven repayment plan and then annually as long as I remain on the plan. I don’t claim my child as a dependent on my taxes and don’t have physical custody of my child, but I contribute significantly to my child’s support. Do I count my child when reporting my family size?
For all income-driven repayment plans, your family size includes your children if they receive more than half of their support from you. You may count your child when determining your family size if you provide more than half of the child’s financial support, regardless of who claims the child for tax purposes or who has physical custody. If you don’t provide more than half of your child’s support, you may not include the child in your family size for income-driven repayment plan purposes.

Can I apply for an income-driven repayment plan while I’m in deferment or forbearance?
Yes. If you wish to begin making payments under an income-driven plan before your deferment or forbearance is over, ask your loan servicer to end the deferment or forbearance early. You can do this on the income-driven repayment application.

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Miscellaneous

If my required monthly payment under an income-driven repayment plan is less than the full amount of interest that accrues on my loans each month, what happens to the interest that isn't covered by my payment?
Under all of the income-driven repayment plans, your monthly payment amount may sometimes be less than the amount of interest that accrues on your loans (this is called "negative amortization"). Under the REPAYE, PAYE, and IBR plans (but not the ICR Plan), the government will pay all or a portion of the interest that isn't covered by your monthly payment (see next paragraph). Otherwise, any unpaid interest not covered by your monthly payment will be capitalized (added to your loan principal balance) according to rules that vary depending on the repayment plan.

If your REPAYE Plan monthly payment is less than the amount of interest that accrues, any unpaid interest will be capitalized if

  • you are removed from the REPAYE Plan because you failed to recertify your income by the annual deadline, or
  • you voluntarily leave the plan.

Under the REPAYE Plan, there is no limit on the amount of unpaid interest that may be capitalized under the conditions described above.

If your PAYE Plan or IBR Plan monthly payment is less than the amount of interest that accrues, any unpaid interest will be capitalized if

  • you no longer qualify to make payments that are based on your income, or
  • you leave the plan.

Under the PAYE Plan, the amount of unpaid interest that may be capitalized if you no longer qualify to make payments that are based on your income is limited to 10 percent of your original loan principal balance at the time you entered the PAYE Plan. There is no limit on the amount of unpaid interest that may be capitalized if you leave the PAYE Plan.

Under the IBR Plan, there is no limit on the amount of unpaid interest that may be capitalized under either of the conditions described above.

If your ICR Plan monthly payment is less than the amount of interest that accrues, any unpaid interest will be capitalized annually until your outstanding loan principal amount is 10 percent greater than your original principal amount at the time you entered repayment. After that, interest that isn’t covered by your monthly payment amount will continue to accrue, but will no longer be capitalized.

I understand that under the REPAYE, PAYE, and IBR plans, I may not have to pay some of the interest on my loans. How does this work?
If your calculated monthly payment amount under the REPAYE, PAYE, or IBR plans doesn't cover all of the interest that accrues on your loans each month, the government will pay all or a portion of the remaining unpaid accrued interest that is due each month. The specific interest benefit varies depending on the plan.

Under the REPAYE Plan, if your calculated monthly payment doesn’t cover all of the interest that accrues, the government will pay

  • all of the remaining interest that is due on your subsidized loans (including the subsidized portion of a consolidation loan) for up to three consecutive years from the date you begin repaying your loans under the REPAYE Plan, and half of the remaining interest on your subsidized loans following this three-year period; and
  • half of the remaining interest that is due on your unsubsidized loans (including the unsubsidized portion of a consolidation loan), during all periods.

For example, if the monthly interest that accrues on your subsidized loans is $40, but your monthly REPAYE Plan payment covers only $25 of this amount, the government will pay the remaining $15 for the first three consecutive years from the date you began repaying your loans under the REPAYE Plan, and will pay $7.50 of the remaining $15 in interest after this three-year period. If the monthly interest that accrues on your unsubsidized loans is $30, but your monthly REPAYE Plan payment covers only $20 of this amount, the government will pay $5 of the remaining $10 in interest during all periods.

Under the PAYE Plan and the IBR Plan, if your calculated monthly payment doesn’t cover all of the interest that accrues on your subsidized loans (including the subsidized portion of a consolidation loan), the government will pay all of the remaining interest that is due for up to three consecutive years from the date you begin repaying your loans under the PAYE or IBR plan.

For example, if the monthly interest that accrues on your subsidized loans is $40, but your monthly PAYE or IBR plan payment covers only $25 of this amount, the government will pay the remaining $15 for the first three consecutive years from the date you began repaying your loans under the PAYE or IBR plan.

Under the PAYE or IBR plan, you are responsible for paying all of the interest that accrues on your unsubsidized loans, as well as all of the interest that accrues on your subsidized loans after the end of the three-year interest subsidy period. Interest that’s not covered by your monthly payment will continue to accumulate and will be capitalized (added to your loan principal balance) if you no longer qualify to make payments based on income, or if you leave the PAYE or IBR plan.

Under all three plans, the consecutive three-year period during which the government pays all of the remaining interest that accrues on your subsidized loans does not include periods of economic hardship deferment. However, periods of any other type of deferment or forbearance are counted.

For example, if you receive the interest subsidy benefit on your subsidized loans for your first year of repayment under the REPAYE, PAYE, or IBR plan, and then receive an economic hardship deferment for the next two years, the government would still pay all of the remaining interest that accrues on your subsidized loans for another two consecutive years after the economic hardship deferment ends. However, if instead of receiving an economic hardship deferment, you return to school and receive an in-school deferment for two years following your first year of repayment, you would have no remaining eligibility for the interest subsidy benefit at the end of the deferment period under the PAYE or IBR plan. Under the REPAYE Plan, you would still qualify for a partial interest subsidy benefit, as explained above.

There is no interest payment benefit under the ICR Plan. If your monthly payment doesn't cover all of the interest that accrues each month, you are responsible for paying the full amount of that interest.

If I apply for an income-driven repayment plan during the six-month grace period on my loans, will I still receive the grace period?
Yes. Choosing a repayment plan—including an income-driven repayment plan—during your six-month grace period has no effect on the grace period. You do not enter repayment on your loans until after your grace period has ended.

If you want to repay your loans under an income-driven plan when your grace period ends, you should apply for the income-driven plan at least two months before the end of your grace period to allow time for application processing. If you apply for an income-driven repayment plan too early, your loan servicer may ask you to reapply closer to when your grace period will end.

Will my choice to repay my loans under an income-driven repayment plan affect the interest rate of my loans?
No. The repayment plan that you choose doesn’t affect the interest rate that is charged on your loans. However, because the income-driven repayment plans have a longer repayment period than other repayment plans, and because in some cases your monthly payment amount under an income-driven repayment plan may be less than the amount of interest that accrues each month (negative amortization), you may pay more interest over the life of your loans if you choose an income-driven repayment plan.

If I repay my loans under an income-driven repayment plan, will this affect my credit score or show up on my credit report?
No. The repayment plan that you select is not reported to credit bureaus and has no effect on your credit score. However, your loan will be identified on your credit report as a student loan, and your loan holder will report the status of your loan (for example, whether you are repaying on time or are delinquent or in default) and your monthly payment amount to credit reporting organizations. Regardless of the repayment plan you choose, failure to make your student loan payments on time may negatively affect your credit score.

Can I claim student loan interest that I paid under an income-driven repayment plan on my tax return?
Regardless of your repayment plan, under current federal tax law you may deduct interest that you paid on qualified student loans in accordance with Internal Revenue Service (IRS) rules. Your loan servicer will send you a Form 1098-E showing the amount of interest that you paid. However, you are responsible for monitoring IRS materials and websites for any changes in federal tax law.

If I’m not making my minimum required monthly payment, am I eligible to remain on an income-driven repayment plan?
As with any other repayment plan, you’re required to make your full, required payment each month, unless you received a deferment or forbearance. If you don’t make your full, required monthly payment amount, you could become delinquent or go into default. Defaulted loans are not eligible for income-driven repayment plans or any other repayment plan. Learn about how you can resolve your defaulted loan status through loan rehabilitation or consolidation.

If you’re having trouble making your full, required monthly payment amount under an income-driven repayment plan (or any other repayment plan), contact your loan servicer to discuss options such as changing to a different repayment plan, or requesting a deferment or forbearance. If you don’t know who your loan servicer is, visit “My Federal Student Aid.”

Is there a penalty for making a late payment under an income-driven repayment plan?
Regardless of the repayment plan you choose, you’re expected to make your monthly payments on time. If you make a payment after the due date, your loan servicer may charge a late fee in accordance with the terms and conditions of your promissory note.

Late payments may be reported to credit bureaus and could damage your credit history. Also, if you’re repaying under an income-driven repayment plan and are planning to apply for Public Service Loan Forgiveness, only payments that you make on time (within 15 days of the payment due date) can be counted toward the required 120 payments.

What if I decide that my current income-driven repayment plan is no longer the best repayment plan for my circumstances? Can I change to a different repayment plan?
Generally, if you’re repaying your loans under an income-driven repayment plan, but decide for any reason that you want to change to a different repayment plan (either to another income-driven repayment plan or to a traditional repayment plan), you may change to any other repayment plan for which you are eligible. The only exception is that if you want to change from the IBR Plan to a different repayment plan, you’ll initially be placed on the Standard Repayment Plan. If you then want to change from the Standard Repayment Plan to a different repayment plan, you must first make at least one payment under the Standard Repayment Plan or one payment under a reduced-payment forbearance.

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