Student loan borrowers might be able to see some financial relief in the new year. The U.S. Department of Education issued final regulations establishing a new program that will allow more Direct Loan borrowers to cap their monthly student loan payment at 10% of their annual income, beginning December 2015.
The Revised Pay As You Earn (REPAYE) repayment plan will be available to all Direct Loan student borrowers regardless of when they first obtained their loans. Under the new program, a borrower’s payment will be calculated annually based on income and family size as reported by the borrower. For married borrowers, payments will be based on both the borrower and spouse’s income.
The new program will forgive undergraduate loan balances after 20 years of payments in the REPAYE program and graduate loan balances after 25 years. Learn more about income-based repayment.