Everyone’s financial goals are different, and there are other factors which might affect which repayment plans you are eligible for.
Every plan displayed in the Savi tool - with the exception of Standard - is an income-driven plan. Any of the Income-Driven plans (IDR) would be eligible for PSLF, however, they are calculated differently. If your goal is the lowest monthly payment, select the lowest available plan to you. If your goal is to pay off your loans as quickly as possible (this might mean a higher payment), select the plan that is most aligned with that goal.
IBR (Income Based Repayment) is an income-driven repayment plan (IDR) which calculates your monthly payment accordingly:
- Generally it's 10% of your discretionary income (if you're a new borrower on or after July 1, 2014) - not to exceed your Standard Repayment plan amount.
- Generally 15% of your discretionary income (if you're NOT a new borrower on or after July 1, 2014) - not to exceed your Standard Repayment plan amount.
- Eligible Loan Types include: Direct Subsidized, Direct Unsubsidized, Direct PLUS loans (graduate or professional students), Direct Consolidation Loans which do not contain any Parent PLUS Loans
- These Loan Types are NOT eligible: Direct PLUS Loans, Direct Consolidation Loans which contain Parent PLUS Loans
- Repayment period
- 20 years (if you are a new borrower on or after July 1, 2014)
- 25 years (if you are a NOT new borrower on or after July 1, 2014)
A few other things to consider about IBR:
- If you're married, your spouse's income or loan debt will be considered only if you file a joint tax return.
- Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20 years or 25 years, depending on when you received your first loans. The forgiveness amount will be taxable in the year it is claimed if you are not eligible for PSLF.
For more information about PAYE, click here.
Think carefully about your financial goals for your student loans, and which plan best aligns with those goals. Also note, for Income Driven Repayment plans, you need to recertify your income every twelve months. The plan you select will only reflect the payment amount until you recertify your income again the following year. This means that if your income increases, your payments will also increase. Same if your income decreases significantly.