What are the income-based repayment programs available for student loans?

Income-based repayment programs allow individuals with student loan debt to make payments based on their current income. In Virginia, there are three main programs available to borrowers. The first is the Pay As You Earn Repayment Plan (PAYE). This program sets monthly payments at 10 percent of a borrower’s discretionary income. The amount is based on the borrower’s income since the last review. This program is available to borrowers who took out loans before October 1, 2011. The second program available is called the Revised Pay As You Earn Repayment Plan (REPAYE). This plan sets monthly payments at 10 percent of the borrower’s discretionary income, regardless of when the loans were taken out. An additional benefit of this plan is that any unpaid loan balance is forgiven after 20 or 25 years, depending on the type of loan taken out. Finally, there is the Income-Based Repayment Plan (IBR). This program bases monthly payments on 15 percent of the borrower’s discretionary income and any unpaid balance is forgiven after 25 years. No matter which program is chosen, borrowers must recertify their income and family size with their servicer each year. In addition, borrowers should note that the forgiven amount can be treated as taxable income. It is important to contact a tax advisor to understand the tax implications of each repayment plan.

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What are the income-based repayment programs available for student loans?

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