Who is eligible for an Income-Driven Repayment Plan

[Yusra]

In order to be eligible for an Income-Driven Repayment Plan, you must have a partial financial hardship. This means that the amount you would pay on your loans under a standard 10-year repayment plan is higher than the amount you would pay under an Income-Driven Repayment Plan.

There are four types of Income-Driven Repayment Plans:

• Pay As You Earn (PAYE)

• Revised Pay As You Earn (REPAYE)

• Income-Based Repayment (IBR)

• Income-Contingent Repayment (ICR)

If you’re not sure which plan is right for you, contact your loan servicer for more information.

To qualify for PAYE or IBR, you must have high student loan debt relative to your income and family size. To qualify for REPAYE or ICR, there are no such restrictions anyone with Direct Loans can apply.

In addition to having a partial financial hardship, to be eligible for any of the four Income-Driven Repayment Plans you must also:

• Have Direct Loans from the William D. Ford Federal Direct Loan Program

• Not be in default on your loans

If you’re not sure if you have Direct Loans, contact your loan servicer. If you are in default on your loans, you’ll need to repay your loans in full before you can enroll in an Income-Driven Repayment Plan.

 

[Knowlopedia]

If you're struggling to make your student loan payments, you might be eligible for an income-driven repayment plan. These plans are designed to make your payments more manageable, based on your income and other factors.

Income-driven repayment plans are available to borrowers with federal student loans, including Direct Loans, Stafford Loans, and PLUS Loans. To be eligible, you must have a partial financial hardship, which means your monthly payments would be more than 10% of your discretionary income.

Discretionary income is the difference between your adjusted gross income (AGI) and 150% of the poverty line for your family size. For example, the poverty line for a family of three is $20,090, so 150% of that would be $30,135. If your AGI is $40,000, your discretionary income would be $9,865 ($40,000 - $30,135).

Once you know your discretionary income, you can use the chart below to find out what your monthly payment would be on an income-driven repayment plan.

If you're not sure which income-driven repayment plan is right for you, you can use the repayment estimator on the Department of Education's website.