— There’s yet another way to pay back student loans
without going broke. It’s called REPAYE.
December, the Department of Education launched its
eighth college-loan repayment program, dubbed the
Revised Pay As You Earn Plan.
student borrowers manage repayments so that loan debt is
not a deterrent for pursuing higher education has been a
central theme for President Obama’s higher-education
agenda since the beginning of this administration,"
Secretary of Education Arne Duncan said when the program
older program, Pay As You Earn, caps payments at 10
percent of a borrower’s monthly income and forgives
any remaining balance on student loans after 20 years of
PAYE was only for borrowers as of October 2007. REPAYE
expands the option to anyone with federal student-loan
debt. (Private student-loan debt is a whole other
also limits monthly loan payments to 10 percent of
discretionary income — the difference between your
adjusted gross income and 150 percent of the poverty
level for your state and family size.
enroll in the program, visit
let’s go into the weeds of the seven other repayment
plans. They have different eligibility requirements, but
here are the bare bones of each:
Repayment Plan. Payments are fixed (the same amount due
each month). Time frame: up to 10 years.
Repayment Plan. Payments are not fixed, start off low,
then increase every two years. Time frame: up to 10
Repayment Plan. Payments can be either fixed or
graduated. Time frame: up to 25 years.
Repayment Plan. Payments are not fixed, but capped at 15
percent of your discretionary income. Payments fluctuate
as your income rises or falls. Time frame: up to 25
As You Earn (PAYE) Plan: Very similar to the
Income-Based Repayment Plan, except monthly maximum
payments are capped at 10 percent instead of 15 percent
of discretionary income. PAYE was created as part of the
Obama administration’s Student Loan Forgiveness
Program. Payments fluctuate as your income rises or
falls. Time frame: up to 20 years.
Repayment Plan: Payments are recalculated annually,
based on your adjusted gross income, family size and
total loan debt. Payments fluctuate as your income and
debt load changes. Time frame: up to 25 years. Debt
balance forgiven after that.
Repayment Plan: Monthly payments fluctuate based on
annual income. Time frame: up to 15 years. Very similar
to Income-Contingent, but much shorter.
isn’t there just one way to pay back loans?
Lemoine, associate professor of financial planning at
the American College of Financial Services, agrees the
system is way too complicated.
"as college got more expensive, the government
expanded these repayment programs to make them more
sensitive to income."
is "the most flexible," he says. "It’s
the newest, and almost everyone is one eligible,"
including recent borrowers and past borrowers.
takes into account singles who can’t find a job right
away or work at Starbucks and those with families,"
no luck? If you’ve contacted your loan servicer and
still don’t have a way to pay your student loans, the
Department of Education has a Federal Student Aid
Ombudsman Group you can contact.
Ombudsman Group is a neutral and confidential resource
to help resolve disputes about federal student loans.
mail, write to: U.S. Department of Education, FSA
Ombudsman Group, Box 1843, Monticello, Ky. 42633. By
financial aid? Whatever you do, don’t pay to find
seen TV-advertised services and websites offering paid
help filing the Free Application for Federal Student Aid
(FAFSA) for a fee. These sites are not affiliated with
or endorsed by the Department of Education.
official form is available at fafsa.gov, and you can get
free help from the financial-aid office at your college
or the college you’re thinking about attending.
you are asked for your credit-card information while
filling out the FAFSA online, you are not at the
official government site. Remember, the official website
has the .gov suffix.