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2021-05-26

How much will my student loan payment be income based?

How much will my student loan payment be income based?

The income-driven plan you use

Plan Payment Amount
Pay As You Earn (PAYE) 10% of your discretionary income.
Income-Based Repayment (IBR) 10% of discretionary income if you borrowed on or after July 1, 2014; 15% of discretionary income if you owed loans as of July 1, 2014.

How income based repayment is calculated?

Generally, your monthly payments under Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE) are calculated as 10% or 15% of your “discretionary income”, which is your income minus 150% of the poverty level for your family size and state.

Which income based repayment plan is best?

For most borrowers, REPAYE, PAYE, or IBR are better options than ICR, since they could give you lower monthly payments. And PAYE seems to have a slight edge over REPAYE and IBR, since it lowers your payments to 10% and sets your term at 20 years, rather than 25.

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Is income based repayment based on household income?

IBR is similar to the PAYE plan in that your payment is based on adjusted gross income. If you are married and both you and your spouse have student loans, the IBR formula considers you and your spouse’s joint federal student loan debt as well as your joint income if you file taxes jointly.

How much can I make to qualify for IBR?

Your eligibility for IBR is effectively a debt-to-income test – there is no official income limit. If your loan payments would be lower under IBR than if you paid off your loan in fixed payments over 10 years, you can enroll. If your income later increases, you are not disqualified to have your debt forgiven under IBR.

What is considered a qualifying payment for loan forgiveness?

Since you need to make 120 qualifying monthly payments, it will take at least 10 years before you can qualify for PSLF. You can’t qualify sooner if you make additional monthly payments or payments higher than the amount that is due.

What is IDR loan forgiveness?

If you’re making payments under an income-driven repayment plan and also working toward loan forgiveness under the Public Service Loan Forgiveness (PSLF) Program, you may qualify for forgiveness of any remaining loan balance after you’ve made 10 years of qualifying payments, instead of 20 or 25 years.