Many federal student loans are eligible for income-driven repayment – a type of student loan repayment program that uses a formula to create a uniquely-tailored monthly payment for borrowers based on their income and family size. For most of these plans, borrowers can enroll for up to 20 or 25 years (depending on the specific plan), at which point any remaining balance gets forgiven. This repayment period can be reduced through programs like the Public Service Loan Forgiveness program.
There are currently four major income-driven repayment plans, each with their own unique programmatic requirements and quirks: there’s Income-Contingent Repayment (ICR), Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE). Each plan uses a different formula for calculating monthly payments; but some of the plans also have unique characteristics that differentiate them even further from each other.Read More