Income-Driven Repayment Plans: Questions And Answers - Federal Student Aid, U.s. Department Of Education Page 7
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26Eligible Borrowers
7. What are the eligibility requirements to repay under an income-driven repayment plan?
The four income-driven repayment plans have different borrower eligibility requirements that are
explained below. Not all borrowers are eligible for each plan.
PAYE Plan and IBR Plan
The PAYE Plan is available only to borrowers with eligible loans made under the Direct Loan Program.
The IBR Plan is available to borrowers with eligible loans made under the Direct Loan Program or the
FFEL Program.
Under the PAYE and IBR plans, your required payment amount is generally a percentage of your
discretionary income. To initially qualify for either plan—and to continue to make payments based on your
income—your income must be low compared to your eligible federal student loan debt.
To determine your eligibility, your loan servicer will do the following:
Determine your monthly payment amount under the PAYE Plan or the IBR Plan, based on your
income and family size.
Determine your monthly payment amount under the 10-year Standard Repayment Plan for your
eligible federal student loans, using either the amount you owed when you first entered repayment on
your loans, or the amount you owe at the time you request the PAYE or IBR plan, whichever is higher.
Compare your 10-year Standard Repayment Plan monthly payment amount with the monthly amount
you would pay under the PAYE or IBR plan based on your income and family size.
If the PAYE or IBR plan monthly payment amount is less than the 10-year Standard Repayment Plan
monthly payment amount, you would meet the initial eligibility requirement. If the amount you would pay
under the PAYE or IBR plan is the same as or more than the amount you would pay under the 10-year
Standard Repayment Plan, you would not benefit from having your monthly payment based on your
income and therefore would not qualify for those plans.
If you meet the eligibility requirement described above, you’re considered to have a “partial financial
hardship.” If you have a partial financial hardship, you qualify to make payments based on income. If you
don’t have a partial financial hardship, you don’t qualify to make payments based on income.
Example
You are single and you owed a total of $40,000 in eligible student loans when your loans first entered
repayment; as a result of capitalized interest (interest that has been added to your loan principal balance)
you now owe $45,000 on those loans.
Your monthly repayment amount under the 10-year Standard Repayment Plan would be $552, based
on $45,000 in loan debt at an interest rate of 8.25%.
If your PAYE or IBR Plan payment amount is less than $552, you would be eligible to repay your
loans under the PAYE Plan (if you meet the other eligibility requirements for this plan) or the IBR Plan.
REPAYE Plan and ICR Plan
The REPAYE and ICR plans do not have an initial eligibility requirement like the PAYE and IBR plans.
Any borrower with an eligible Direct Loan may choose to repay under the REPAYE Plan or ICR Plan.
Federal Student Aid |
StudentAid.gov
Page 7 of 26
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