Are you a student looking for the best repayment plan for your student loan debt? If so, then you’ve probably heard of both PAYE (Pay As You Earn) and REPAYE (Revised Pay As You Earn). But what’s the difference between these two options? In this blog post, we’ll break down the differences between PAYE and REPAYE to help you make an informed decision about which one is best for you.
What is PAYE?
PAYE (Pay As You Earn) is an income-driven repayment plan that helps keep your monthly payments affordable. Under this plan, your payment amount will be determined by your adjusted gross income (AGI), family size, and total federal student loan balance.
Furthermore, this plan caps your payments at 10% of discretionary income, meaning that if you make more money in a year, your payment amount won’t go up. However, it should be noted that under PAYE, any remaining balance after 20 years of on-time payments will be forgiven.
What is REPAYE?
REPAYE (Revised Pay As You Earn) is another type of income-driven repayment plan similar to PAYE. The main difference between these two plans is that with REPAYE, there is no cap on your monthly payments – meaning that if you make more money in a year than when you first signed up for the program, your payment amount could increase accordingly. Additionally, under REPAYE any remaining balance after 25 years of on-time payments will be forgiven.
When it comes to paying back student loans, understanding the differences between PAYE and REPAYE can help you make an informed decision about which repayment option makes sense for you and your financial situation. While both plans are designed to help keep monthly payments affordable based on income level and family size, there are some key differences such as payment caps and forgiveness terms that should be considered before making a final decision. By taking the time to do research and compare the different options available to you – such as these two plans – you can find the best repayment program for your specific needs.
Hamad Malik is a highly experienced finance manager and developer with proven experience in leading teams and managing complex financial projects. He has extensive knowledge of the PAYE system and is capable of developing PAYE calculators that accurately calculate New Zealand deductions. His expertise in financial processes and technology means he can create tools to automate paydays so that payments are always correct and on time. An innovative thinker, Hamad is passionate about developing solutions that can help businesses reach their goals quicker and easier. He embraces change and works hard to ensure each project he oversees is successful.