Question: What is the “Pay as You Earn” program?
Answer: It’s a new iteration of the federal government’s Income-Based Repayment (IBR) program, launched in 2007 to help students repay their federal education loans. Both programs tie loan payments to a borrower’s earnings and forgive remaining balances after required payments have been made for a certain number of years. Pay as You Earn offers monthly loan payments of 10% of discretionary income, and remaining loan balances are forgiven after 20 years. The original IBR features 15% of discretionary income payments and forgiveness after 25 years. (The standard student loan repayment period is 10 years and payments are fixed or graduated.) Students who don’t qualify for the Pay as You Earn program may be eligible for the original IBR program. Information is available at studentloans.gov.
