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Nov 10, 2016 07:51 AM EST

Can Income-Driven Repayment Plans Help You With Your Student Loans?

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Income-driven repayment plans can give students more time to repay their loans based on their income. There are several plans that can help graduates with their college debt.

It was previously reported that one common student loan myth is that student loan forgiveness is only given to those who work in public service. There are other ways to repay one's federal loan debt, one of which is through income-driven repayment plans. This is available for all federal loan borrowers.

According to the official website of Federal Student Aid, students can choose from several student loan repayment plans. Two of the income-driven plans are the Income-Based Repayment Plan (IBR) and the Revised Pay As You Earn Repayment Plan (REPAYE).

Students are eligible for the IBR if they have direct subsidized and unsubsidized loans, subsidized and unsubsidized Federal Stafford Loans as well as PLUS loans. The payment time frame will be every month and will be 10 or 15 percent of one's discretionary income.

Payments are recalculated each year. Changes will be based on one's updated income and family size.

REPAYE is also available for students with direct subsidized and unsubsidized loans, subsidized and unsubsidized Federal Stafford Loans as well as PLUS loans. Monthly payments will be 10 percent of one's discretionary income as well.

Anyone who is a Direct Loan borrower can choose this plan, provided they have an eligible loan type. Monthly payment can also be more than the 10-year Standard Plan amount.

According to Forbes, REPAYE is the best option for people who can't afford paying their standard monthly payment for federal student loans and who also don't qualify for the PAYE or IBR plans. It is also good for those who want to use the public service loan forgiveness plan.

This is best for those who are currently on IBR since before Jul. 2014 because they are not eligible for PAYE yet. Graduates who want to pay off their student loans before they qualify for loan forgiveness under the repayment plan should also use REPAYE.

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