What Is the REPAYE Plan and How Does It Work?

See if this income-driven repayment plan is right for you

surprised and confused young woman checking her bank balance on her smartphone while holding a student loan bill

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Feeling crushed by too-high student loan payments? If federal student loan costs are unaffordable with your current income, you have options besides trying to scrape by each month. Income-driven repayment plans like Revised Pay As You Earn (REPAYE) set monthly payments based on your income, cost of living, and household size—rather than how much you owe.

Learn how the REPAYE plan compares to other income-driven repayment plans. Find out if you qualify for REPAYE, and whether it’s the best option for you.

What Is Revised Pay As You Earn (REPAYE)?

There are four income-driven repayment plans available for federal student loans:

  • Revised Pay As You Earn, or REPAYE
  • Pay As You Earn, or PAYE
  • Income-Based Repayment, or IBR
  • Income-Contingent Repayment, or ICR

These plans tie student loan costs to income, which can give many borrowers a chance to get lower student loan payments.

REPAYE, however, is the newest income-driven repayment plan, introduced in December 2015. REPAYE is structured similarly to PAYE, but is more accessible and offers slightly different benefits to borrowers.

How REPAYE Compares to Other IDR Plans

The different income-driven repayment plans are slightly different, however. Here’s a rundown on REPAYE and how it compares to other income-driven repayment plans.

Monthly Payments

REPAYE payments are generally set to 10% of discretionary income, then divided by 12 to get the monthly payment. For this plan, discretionary income is calculated as the difference between a borrower’s adjusted gross income and 150% of the poverty guideline for their state and family size.

While PAYE and IBR require borrowers to meet a standard to prove their income is low, REPAYE has no such requirement.

And unlike IBR and PAYE, REPAYE does not cap monthly payment amounts. This means that if your income increases enough over time, monthly REPAYE payments could exceed what you would pay under a 10-year Standard Repayment Plan. 

If your monthly payment is calculated to equal less than $5, your required monthly payment owed is $0. If it is between $5 and $10, your required monthly payment is $10. 

Spousal Income

If you’re married, how does this affect income-driven repayment plans? PAYE, IBR and ICR plans will only consider your individual income if you and your spouse file taxes separately, but will consider joint income if you file together.

REPAYE, however, will set payments based on both of your incomes and federal student loan balances, regardless of filing status.

REPAYE does provide an exception to this rule. It will use the individual income to set payments for a married borrower who is separated from their spouse or has no access to the spouse’s income.

Student Loan Forgiveness

REPAYE does limit how long borrowers will be repaying balances. Student loan forgiveness is granted on the remaining balance after 20 years for undergraduate student loans repaid on REPAYE.

If a borrower has any loans repaid through REPAYE were granted for graduate or professional studies, however, forgiveness is granted after 25 years of repayment instead.

Student Loan Interest Benefits

For some borrowers, monthly payments set under an income-driven repayment plan will be less than the interest assessed on their student loans each month. When payments don’t keep up with interest charges, that’s also called negative amortization.

REPAYE, like the PAYE and IBR plans, provides student loan interest assistance to cover the unpaid interest when negative amortization occurs. All three of these plans cover 100% of the assessed interest on subsidized loans that are not paid by monthly payments, for up to three years.

Through REPAYE, however, the federal government pays 50% of these unpaid interest costs on unsubsidized loans with no time limits. It also pays the same 50% of leftover interest for subsidized loans once the initial three-year period of 100% payment ends.

Should You Choose the REPAYE Plan?

Before considering switching to the REPAYE Plan, you’ll need to figure out if you can. Review these REPAYE eligibility requirements to see if your student loans qualify for this plan.

  • There are no income requirements to enroll in REPAYE, unlike PAYE and IBR. Most borrowers can enroll if they have eligible federal student loans.
  • Federal student loans eligible for REPAYE include Direct Subsidized and Unsubsidized Loans, Grad PLUS Loans, and Direct Consolidation Loans.
  • Direct PLUS Loans made to parents are ineligible for REPAYE, along with any other loans that were used to repay or consolidate federal student loans made to parents.
  • You are required to recertify your income each year. All income-driven repayment plans, including REPAYE, require you to update your reported income and family size each year.

Some federal student loans that are not eligible for REPAYE, such as FFEL or Perkins Loans, can be consolidated into a Direct Loan and become eligible for this repayment plan. This is not the case for Parent PLUS Loans and other loans that were made to parents, which cannot be consolidated to become eligible for REPAYE.

Based on REPAYE eligibility and other features of this plan, here are some signs that REPAYE is worth considering.

  • Your monthly payments will be lower than the student loan interest assessed each month. In this case, REPAYE will pay half of the unpaid interest and limit how much and how fast it racks up.
  • You don’t meet income requirements on the PAYE or IBR Plan.

REPAYE might not be a great fit though if you can relate to one of the following situations.

  • You have Parent PLUS Loans and you’re not eligible for REPAYE. In this case, consider consolidating these loans to become eligible for ICR.
  • You’re married and want payments based on your income alone. This is possible with PAYE, IBR or ICR if you file separate tax returns.
  • You have student loans from a graduate or professional program, but you don’t want to wait 25 years for forgiveness. PAYE and IBR offer forgiveness after just 20 years of repayment.
  • Your income might increase a lot in the coming years, and you’re worried about your income-driven payments rising with it. Look into PAYE or IBR, which cap monthly payments. 

The differences between REPAYE and other income-driven plans can be a bit confusing. Take the time to understand them to choose the option that best matches your student loan repayment goals and needs. Once you decide which one is right for you, sign up with an Income-Driven Repayment Plan Request on the Federal Student Aid website.

Article Sources

  1. Department of Education Homeroom Blog. "Your Federal Student Loans Just Got Easier to REPAYE," Accessed Nov. 18, 2019.

  2. Federal Student Aid. "Income-Driven Plans Questions and Answers: Monthly Payment," Accessed Nov. 18, 2019.

  3. Federal Student Aid. "Income-Driven Plans: Will I Always Pay the Same Amount Each Month Under an Income-Driven Repayment Plan?" Accessed Nov. 18, 2019.

  4. Federal Student Aid. "Income-Driven Plans Questions and Answers: Married Borrowers," Accessed Nov. 18, 2019.

  5. Federal Student Aid. "Income-Driven Plans: How Long Will I be in Repayment Under Each Plan?" Accessed Nov. 18, 2019.

  6. Federal Student Aid. "Income-Driven Plans Questions and Answers – Miscellaneous," Accessed Nov. 18, 2019.

  7. Federal Student Aid. "Income-Driven Plans: What Types of Federal Student Loans Can I Repay Under an Income-Driven Repayment Plan?" Accessed Nov. 18, 2019.

  8. Federal Student Aid. "Income-Driven Plans: How Do I Apply for an Income-Driven Repayment Plan?" Accessed Nov. 18, 2019.