Options to Reduce Federal Loan Payments - Pay As You Earn Tab

Pay As You Earn Repayment Plan (PAYE)

The Pay As You Earn Repayment Plan helps keep your monthly student loan payments affordable. Under the PAYE plan, your monthly payment amount will be calculated based on your dicretionary income; the difference between your annual income and 150 percent of the poverty guideline for your family size and state of residence. Payments are generally based on 10 percent of your discretionary income, but never more than the 10-year Standard Repayment Plan amount. This repayment plan has a lower payment cap than the Income Based Repayment Plan and provides forgiveness after 20 years of on-time payments.

You must be a new borrower as of Oct. 1, 2007, and must have received a disbursement of a Direct Loan on or after Oct. 1, 2011. You are a new borrower if you had no outstanding balance on a Direct Loan or FFEL Program loan as of Oct. 1, 2007, or had no outstanding balance on a Direct Loan or FFEL Program loan when you received a new loan on or after Oct. 1, 2007. Use the Federal Student Loan Repayment Calculator to see if this plan is right for you.