Eligible Borrowers:
You must be a new borrower on or after Oct. 1, 2007, and must have received a disbursement of a Direct Loan on or after Oct. 1, 2011.
You must have a high debt relative to your income.
Monthly Payment:
Your monthly payments will be 10 percent of discretionary income, but never more than you would have paid under the 10-year Standard Repayment Plan.
Payments are recalculated each year and are based on your updated income and family size.
You must update your income and family size each year, even if they haven’t changed.
Time Frame:
Any outstanding balance on your loan will be forgiven if you haven’t repaid your loan in full after 20 years.
You may have to pay income tax on any amount that is forgiven.
Eligible Loans:
- Direct Subsidized and Unsubsidized Loans
- Direct PLUS Loans made to students
- Direct Consolidation Loans that do not include PLUS loans (Direct or FFEL) made to parents
How to Apply
The quickest and easiest way to submit your request for PAYE is online. You will need your FSA ID, personal information, spouse information (if applicable), and income information to complete the request.
If you are unable to complete the online request, you have the option to use the form instead.
Eligibility
PAYE is available for Direct Loan borrowers only, and eligible loan types include: Direct Subsidized/Unsubsidized, Direct Grad PLUS, and Direct Consolidation loans. Direct Parent PLUS loans, defaulted loans, and consolidation loans that repaid a Parent PLUS loan cannot be repaid under the PAYE plan.
Monthly Payment Calculation
Your monthly payments will be based on your eligible federal student loan debt, family size, and your income. Your monthly payment amount will be capped at 10% of your discretionary income. Your discretionary income is the difference between your Adjusted Gross Income (AGI) and 150% of the poverty line amount for your family size and state. The payment amount is valid for 12 months and you will be required to reapply each year by submitting a new Income-Driven Repayment Plan Request form that will provide us with your updated income and family size information if you wish to continue on the PAYE plan. Your payment amount may change as your income or family size changes.
Note
If you are married, your spouse’s income or loan debt will be considered only if you file a joint tax return. If your spouse has eligible student loans, his or her loan debt may also be considered when calculating your monthly payment on PAYE. If you believe that your AGI, as reported on your most recently filed federal income tax return, does not reasonably reflect your current income and your spouse’s current income (if applicable), you may provide alternative documentation of income and provide proof of your current income (as instructed in Section 5 of the Income-Driven Repayment Request form).
Loan Forgiveness
Under PAYE, your remaining balance will be forgiven after 20 years.
You may be eligible for loan forgiveness after 10 years if you are seeking Public Service Loan Forgiveness (PSLF).
Learn More About PSLFNote
The Department of Education (ED) is conducting a one-time adjustment of payment counts toward Income-Driven Repayment and Public Service Loan Forgiveness programs. For more information, visit StudentAid.gov/idradjustment.
Interest Subsidy
If you have subsidized loans and your monthly payment amount under PAYE is not sufficient to pay the amount of interest that accrues on a monthly basis, the federal government will subsidize 100% of the remaining interest that is due for the first three consecutive years.
Payment Estimate
Interested in what your payment amount would be on SAVE? Use the Loan Simulator on StudentAid.gov.
Loan SimulatorAdditional Resources
- Video: How to Create an FSA ID
- Repayment Plan Comparison Chart
- Income-Driven Repayment Plans (StudentAid.gov)
- Income-Driven Repayment Form
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