Income-Driven Repayment Plans: Questions And Answers - Federal Student Aid, U.s. Department Of Education Page 25
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26eligibility 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.
50. 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.
51. 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.
52. 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.
53. 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 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.
54. 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, but 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
Federal Student Aid |
StudentAid.gov
Page 25 of 26
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