8 Student Loan Repayment Plans Explained

7. Revised Pay As You Earn (REPAYE)

What it is: REPAYE is a broadly available IDR plan that caps payments at 10% of discretionary income and includes an interest subsidy that helps prevent unpaid interest from ballooning. Who it fits: Many borrowers, including graduate students and those with larger debts, because REPAYE has broad eligibility. How payments work: Payments are based on income and family size, and the federal government subsidizes unpaid interest up to certain limits to protect borrowers from negative amortization. Pros: Good protection against runaway interest and widely accessible; can be a practical choice for those expecting slow income growth. Cons: Spousal income can affect payment amounts for married borrowers who file jointly; total repayment time can be long. How to decide: Compare REPAYE to other IDR options for your household; assess whether spousal income will increase payments. Action steps: Use the federal repayment estimator and confirm how interest subsidy rules apply to your loans.