Pay As Your Earn (PAYE) is a student loan repayment option designed to help those who are struggling to find work after leaving school. If you qualify, PAYE may be able to reduce your monthly required payments to levels lower than you could achieve with other income-based repayment options.
Who qualifies?
Your loan type must be one of the following:
- Direct Subsidized Loan
- Direct Unsubsidized Loan
- Direct PLUS Loan made to graduate or professional student
- Direct Consolidation Loan without underlying PLUS loans made to parents
You must be a new borrower, initiating the loan on October 1, 2007 or later.
You must have received a disbursement of the loan on or after Oct. 1, 2011.
You must not already be in repayment of your Direct Loan(s).
The payments you would make for 10 years under your standard repayment plan need to be more than what PAYE would require.
What would my payments be?
To find out what you would be paying, visit the federal government’s repayment calculator.
Please note that your PAYE payments can change from year-to-year.
Besides lower payments, what are the other potential benefits?
Having interest not covered by your monthly payments subsidized by the federal government for the first three years you are in the plan.
Having your loan forgiven after 20 years, or 10 years if you are employed by a qualifying public service organization.
What are the potential drawbacks?
You can’t consolidate the payments for a loan in the PAYE program. Making lower payments means a longer payoff period, which in turn means more interest paid in the long-haul.
You’ll need to fill out new paperwork every year for your loan servicer to process your plan.
How do I apply?
If you think PAYE might be a good fit for your situation, visit StudentLoans.gov, sign in and follow the prompts for Pay As You Earn.
If you are unsure whether the PAYE option is best for you, contact your loan servicer and ask them to review with you how PAYE might benefit your repayment.
Find Your Balance 