Income-Driven Repayment Plans: Questions And Answers - Federal Student Aid, U.s. Department Of Education Page 12
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2617. 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 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 2016 HHS Poverty Guideline amount for a family of one in the 48 contiguous
states and the District of Columbia is $17,820. The difference between your AGI and 150 percent of
the Poverty Guideline amount is $22,180. 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:
o
10 percent of your discretionary income is $2,218.
o
Dividing this amount by 12 results in a monthly payment of $184.83.
If you are repaying under the IBR Plan and you’re not a new borrower, the calculation works like this:
o
15 percent of your discretionary income is $3,327.
o
Dividing this amount by 12 results in a monthly payment of $277.25.
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.
18. 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
Federal Student Aid |
StudentAid.gov
Page 12 of 26
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