What is PAYE?
Even better, any remaining balance will be forgiven after 20 years — although you'll have to pay taxes on that amount. PAYE is also an elegible payment plan if you qualify for Public Service Loan Forgiveness.
Do I qualify for PAYE?
- You borrowed your first federal student loan on or after Oct. 1, 2007, and
- You took out a federal Direct Loan or Direct Consolidation Loan on or after Oct. 11, 2011.
But listen ... don't sweat the calculation too much. Instead, just call your lender ask if you qualify.
When is PAYE a good idea?
What are the benefits of PAYE?
How is the monthly payment calculated?
PAYE monthly payments are typically 10% of your discretionary income.
Check out the U.S. Department of Education's Pay-As-You-Earn calculator to see your projected monthly payment.
How do I enroll in PAYE?
You can enroll in PAYE by filling out an application through the government online.
There no application fee to complete this application, and the process only takes 10 minutes or less. You'll be asked about your financial situation, so be prepared with documents that prove your income, like a W-2.
What kind of loans are eligible?
Qualifying loans include:
- Direct subsidized and unsubsidized loans
- Graduate PLUS Loans (but not Parent PLUS Loans), and
- Consolidation loans made after October 1, 2011, as long as the consolidation loans do not include Direct or Federal Family Education Loans (FFEL) made before October 1, 2007.
Want to see if PAYE or another income-driven repayment plan could work for you? See how they compare.