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REPAYE (Revised Pay As You Earn)
Definition
An income-driven repayment plan with payments at 10% of discretionary income and forgiveness after 20-25 years.
Explanation
REPAYE is available to all Direct Loan borrowers regardless of when they borrowed. Payments = 10% of discretionary income (above 150% of poverty line). Undergraduate loans forgiven after 20 years; graduate loans after 25 years.
REPAYE includes an interest subsidy: the government pays 50% of unpaid accrued interest on subsidized loans, helping during low-income periods.
Example
Borrower earning $60,000: REPAYE payment ≈ $350/month. After 20-25 years, remaining balance is forgiven.