What You Need to Know About Biden’s REPAYE Plan
On March 10, 2021, President Joe Biden signed the American Rescue Plan, which includes several provisions related to student loan debt. One of the most significant changes is the expansion of the Revised Pay As You Earn (REPAYE) repayment plan. In this blog post, we will explore what the REPAYE plan is and how it can benefit borrowers.
Key Takeaways:
- The REPAYE plan is a federal income-driven repayment plan that can be helpful for borrowers who are struggling to make their monthly student loan payments.
- The plan’s monthly payments are based on the borrower’s income and family size, and the repayment period is extended to 20 or 25 years. Loan forgiveness is also available for any remaining balance after the repayment period ends.
- The REPAYE plan has been expanded under the American Rescue Plan, including allowing borrowers with Federal Family Education Loans (FFEL) and Perkins Loans to participate and reducing the percentage of income required for some borrowers.
What is the REPAYE plan?
The REPAYE plan is a federal income-driven repayment plan that is available to borrowers who have federal student loans. Under
this plan, borrowers’ monthly payments are based on their income and family size, and the repayment period is extended to 20 or 25 years, depending on the borrower’s loan balance. The REPAYE plan also offers loan forgiveness for any remaining balance after the repayment period ends.
How does the REPAYE plan benefit borrowers?
The REPAYE plan can be beneficial for borrowers who are struggling to make their monthly student loan payments. The plan’s monthly payments are based on the borrower’s income, which means that if the borrower’s income is low, their monthly payment will also be low. This can provide much-needed relief for borrowers who are facing financial difficulties.
The REPAYE plan can also help borrowers who are pursuing careers in public service or non-profit organizations. Under the Public Service Loan Forgiveness (PSLF) program, borrowers who work for qualifying employers can have their remaining loan balance forgiven after making 120 qualifying payments. The REPAYE plan is one of the eligible repayment plans for PSLF, which means that borrowers who are on this plan can make qualifying payments towards loan forgiveness.
What changes have been made to the REPAYE plan?
Under the American Rescue Plan, the REPAYE plan has been expanded to help more borrowers. Previously, the REPAYE plan only allowed borrowers with Direct Loans to participate. However, under the new rules, borrowers with Federal Family Education Loans (FFEL) and Perkins Loans can also participate in the plan.
Additionally, the percentage of income that borrowers are required to pay under the REPAYE plan has been reduced from 10% to 5% for borrowers who are not married and do not have dependents. This can significantly reduce the monthly payment for some borrowers, making it easier for them to manage their student loan debt.
Conclusion
The expansion of the REPAYE plan is good news for borrowers who are struggling to make their student loan payments. The plan’s income-driven repayment structure can provide relief for borrowers who are facing financial difficulties, and the loan forgiveness option can provide a light at the end of the tunnel. The changes to the plan under the American Rescue Plan will help even more borrowers, including those with FFEL and Perkins Loans, and reduce the percentage of income required for some borrowers. As always, borrowers should do their research and speak with their loan servicer to determine if the REPAYE plan is right for them.
