Understanding REPAYE: Revised Pay As You Earn
The Revised Pay As You Earn (REPAYE) plan is an income-driven repayment option for federal student loans in the United States. Designed to make student loan payments more manageable based on your income and family size, REPAYE offers unique benefits that distinguish it from other repayment plans like PAYE (Pay As You Earn) and IBR (Income-Based Repayment).
REPAYE calculates your monthly payment as 10% of your discretionary income, which is your adjusted gross income minus 150% of the poverty guideline for your family size. Unlike PAYE, REPAYE has no income cap, meaning all borrowers with eligible federal loans can enroll regardless of their income level. This makes REPAYE particularly attractive for borrowers who may not qualify for PAYE due to income restrictions.
Key Features of REPAYE
One of the most significant advantages of REPAYE is the interest subsidy program. If your calculated monthly payment is less than the interest accruing on your loans, the government pays 50% of the unpaid interest on subsidized loans and 50% of the unpaid interest on unsubsidized loans for the first three years. After three years, the government continues to pay 50% of the unpaid interest on subsidized loans, while you're responsible for the full interest on unsubsidized loans.
The repayment period for REPAYE depends on your loan type. Undergraduate loans are forgiven after 20 years of qualifying payments, while graduate or professional school loans are forgiven after 25 years. If you have a mix of undergraduate and graduate loans, the 25-year forgiveness period applies to all loans. This forgiveness feature can significantly reduce your total repayment amount, especially if your income remains relatively low throughout the repayment period.
REPAYE vs. PAYE vs. IBR
When comparing REPAYE with other income-driven plans, several key differences emerge. PAYE, or Pay As You Earn, also uses 10% of discretionary income but has stricter eligibility requirements. PAYE is only available to new borrowers who took out loans after October 1, 2007, and received a disbursement after October 1, 2011. Additionally, PAYE caps your payment at the standard 10-year repayment amount, while REPAYE has no such cap.
IBR, or Income-Based Repayment, offers two versions depending on when you borrowed. New borrowers pay 10% of discretionary income, while older borrowers pay 15%. Like PAYE, IBR caps payments at the standard 10-year amount. IBR also has forgiveness periods of 20 or 25 years, similar to REPAYE, but doesn't offer the same interest subsidy benefits.
The choice between these plans depends on your specific circumstances. REPAYE is often the best option for borrowers who don't qualify for PAYE, have high loan balances relative to income, or expect their income to remain moderate. The interest subsidy can be particularly valuable for borrowers with high-interest loans or those in the early stages of repayment when interest accrual is highest.
Monthly Payment Calculation
Calculating your REPAYE monthly payment requires understanding your discretionary income. The formula takes your adjusted gross income and subtracts 150% of the poverty guideline for your family size. For 2025, the poverty guideline for a single person in the contiguous United States is $15,760, meaning 150% equals $23,640. For a family of four, 150% of the poverty guideline is $48,300.
Once you've determined your discretionary income, your monthly payment is simply 10% of that amount divided by 12. For example, if your discretionary income is $30,000, your monthly payment would be $250. This payment amount is recalculated annually based on your updated income and family size, ensuring your payments remain proportional to your financial situation.
UK Student Loan Repayment Plans
While REPAYE is specific to United States federal student loans, the United Kingdom operates a similar income-contingent repayment system. UK student loan repayments are automatically deducted from your salary once you earn above a specific threshold, with different plans depending on when and where you studied.
Plan 1 applies to students who started university before 2012 in England, Wales, or Northern Ireland, or before 1998 in Scotland, with a repayment threshold of £22,015. Plan 2 covers English and Welsh students who started after 2012, with a threshold of £27,295. Plan 4 applies to Scottish students, and Plan 5 covers those who started after 2023, with a threshold of £25,000. All UK plans use a 9% repayment rate on income above the threshold.
Using the REPAYE Calculator
Our REPAYE calculator helps you understand how this repayment plan works for your specific situation. Simply enter your loan amount, interest rate, annual income, and family size. The calculator will show your monthly payment, total interest costs, and potential loan forgiveness amount. You can also compare REPAYE with PAYE and IBR plans to see which option best fits your financial goals.
The calculator accounts for REPAYE's interest subsidy, showing you how much the government contributes toward your interest payments. You can also model extra payments or lump sum payments to see how they affect your repayment timeline and total interest costs. Whether you're planning your student loan repayment strategy or considering switching to REPAYE, our calculator provides the detailed information you need to make informed decisions about managing your student debt effectively.