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How the federal REPAYE Repayment Plan works
Single borrowers with a bachelor's degree get the most out of this plan.
The Revised Pay As You Earn (REPAYE) Repayment Plan gives you monthly repayments based on your income, making you eligible for several federal forgiveness programs. This is usually a better option if you’re single, since having a larger income can affect your repayment amount. And it’s not the best choice for graduate debt, since those loans come with an extra five years of repayments.
REPAYE Repayment Plan at a glance
| Eligible loans | How much you pay | Repayment term | Who it’s best for |
|---|---|---|---|
|
10% of your monthly discretionary income |
|
Single borrowers paying off undergraduate debt in a low-paying field or looking to qualify for PSLF or Teacher Loan Forgiveness. |
How does the federal REPAYE Plan work?
The REPAYE Repayment Plan is one of four income-driven repayment (IDR) plans available for federal loans. It allows you to pay off your debt with monthly repayments based on 10% of your discretionary income. The Department of Education (DoE) forgives any remaining balance after 20 years of repayments on undergraduate student debt. Graduate and professional student loans take 25 years to qualify for forgiveness.
What’s my discretionary income?
Your discretionary income is the difference between your household income before taxes and 150% of the poverty guideline for your family size in your state. You can find out what the poverty guideline is for your family size and state on the Department of Health and Human Services website.
REPAYE monthly repayment example
Say your household makes $40,000 a year and you live in one of the 48 contiguous states. Here’s how much you’d pay based on different family sizes — keeping in mind that the $40,000 would include your spouse’s income as well.
| Family size | Poverty guideline | Discretionary income | Monthly REPAYE repayment |
|---|---|---|---|
| 1 | $12,490 | $21,265 | $177 |
| 2 | $16,910 | $14,635 | $122 |
| 3 | $21,330 | $8,005 | $67 |
| 4 | $25,750 | $1,375 | $11 |
So what if you get married to someone who also makes $40,000? Your repayments will increase with this repayment plan. And theirs will too if they also choose this plan — even if you file taxes separately.
| Family size | Poverty guideline | Discretionary income | Monthly REPAYE repayment |
|---|---|---|---|
| 2 | $16,910 | $54,635 | $455 |
| 3 | $21,330 | $48,005 | $400 |
| 4 | $25,750 | $41,375 | $345 |
Unlike some other IDR plans, the REPAYE Plan doesn’t cap repayments at the amount you’d pay on the Standard Repayment Plan. If you get married or get a raise, this plan could actually be the most expensive option.
How to calculate your monthly discretionary income
Am I eligible for the REPAYE Plan?
You’re eligible for the REPAYE Plan if you have an eligible federal loan — there are no other requirements. Qualifying loans include:
- Direct Subsidized and Unsubsidized Loans
- Graduate PLUS Loans
- Direct and FFEL Consolidation Loans that don’t include Parent PLUS Loans
Can I qualify for forgiveness on the REPAYE Plan?
You can. You’re eligible for forgiveness after making 20 years of repayments on this plan for undergraduate loans or 25 years for graduate loans. The DoE also recommends this plan if you want to apply for Public Service Loan Forgiveness (PSLF) — though you’ll have to meet other requirements.
On top of this, you’re also eligible for Teacher Loan Forgiveness and a wider range of other loan repayment assistance programs available through government agencies and private organizations.
Pros and cons of the federal REPAYE Repayment Plan
Here are some of the major perks and pitfalls of the REPAYE Plan — compared to other income-driven plans.
Pros
- Loans forgiven at the end of the term. You might not have to pay off your entire loan balance if anything is left after your term is up.
- No age limits for loans. As long as you have the right type of loan, you can qualify for this program. When it was issued doesn’t matter, unlike with other IDR plans.
- Only pay 10% of discretionary income. This is the lowest amount available on an IDR plan.
Cons
- Longer terms for graduate students. It takes five years longer for graduate student debt to qualify for REPAYE forgiveness than undergraduate debt.
- Potentially expensive for married couples. You could end up paying hundreds more a month if you get married — even if you file your taxes separately.
- No cap on monthly repayments. This means you could actually end up paying more per month than you would on the Standard Repayment Plan.
Is the REPAYE plan right for me?
You might want to consider the REPAYE Plan in the following situations:
- You’re in a low-paying field. This plan could come with higher monthly repayments than the Standard Repayment Plan if you make a high-enough salary or get a raise.
- You plan on staying single. Getting married can more than double your monthly repayment.
- You didn’t go to graduate school. Undergraduate loans are forgiven faster than graduate debt.
- You can’t qualify for other IDR plans. This plan has the least restrictive requirements out of any other federal IDR option.
How to sign up for the REPAYE Plan
If it’s your first time signing up for repayments, your servicer will reach out with instructions on how to set up your account and pick a repayment plan. Otherwise, the easiest way to sign up is through your account on the Federal Student Aid (FSA) website. Follow the same steps you would to sign up for any other IDR plan.
How to apply for income-driven repayments
Do I need to reapply each year?
Not exactly. But you need to get your income recertified each year to update your income and family size. You can do this on the FSA website by logging in to your account and filling out a quick online form. You can either enter your tax information manually or use the IRS Data Retrieval Tool to upload your details automatically.
3 alternatives to the REPAYE Plan
If you’re on the fence about signing up for the REPAYE Plan, you might want to consider one of these options instead:
- Other IDR plans. There are better IDR options for borrowers who are married or plan on having a higher income in the future. Compare the REPAYE vs. PAYE vs. IBR Plans to find out which makes the most sense for you.
- Extended Repayment Plan. This repayment plan gives you low, fixed repayments with a 25-year term that don’t rely on your income. You can also opt for the graduated option to get repayments that increase every two years.
- Graduated Repayment Plan. Pay off your loans with repayments that increase every two years with a 10-year term. Or consolidate your federal loans to qualify for a 30-year term.
Interested in refinancing instead? Compare your options
Bottom line
The REPAYE Plan isn’t right for everyone. But if you’re single, paying off undergraduate debt and are hoping to qualify for PSLF, it could be a good fit. You can find out how it compares to other repayment options — including other IDR plans — by reading our guide to student loan repayment programs.
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