The Department of Education Oct. 30 published its final rule for the Revised Pay-As-You-Earn (REPAYE) plan. According to the rule, REPAYE will be available to all borrowers starting December 2015. Similar to current income-driven repayment plans, REPAYE caps borrowers’ monthly payments at 10 percent of discretionary income.
Of particular concern to medical students, REPAYE includes the following new features:
- If a borrower received any loans as a graduate or professional student, the repayment period is 25 years instead of 20 for undergraduates;
- There is no cap on the monthly payment amount;
- For unsubsidized loans, including Direct PLUS Loans made to graduate students, when the monthly payment is not sufficient to pay the accrued interest, only 50 percent of the remaining interest is charged to the borrower; and
- For married borrowers filing jointly or separately, the adjusted gross income of both the borrower and the spouse are used to determine to calculate the monthly payment amount.
REPAYE does not replace current income-driven repayment options, and would be available to borrowers regardless of when they received their Direct Loans. Simplifying the multitude of income-driven repayment plans is expected to be discussed in the upcoming reauthorization of the Higher Education Act.
The department reached consensus agreement with a negotiated rulemaking committee in April, obligating them to use the agreed upon regulatory language [see Washington Highlights, April 3].