President Obama’s Pay As You Earn (“PAYE”) Repayment Plan is a lesser known repayment program that is available to assist borrowers with federal student loans disbursed on or after October 1, 2007. To qualify, you must not have had a balance on a Direct Loan or FFEL loan when you obtained the student loan after October 1, 2007. However, Obama has indicated he will extend the application process to borrowers who began receiving federal student loans prior to this date.
Some of the more specific requirements for the PAYE Repayment Plan include:
- Proving partial financial hardship, at a minimum (as defined by the Department of Education)
- Your federal loan is Direct Subsidized and Unsubsidized for Undergraduates and Direct Plus for Graduates and Professionals.
- You were a new borrower as of October 1, 2007
- You received a disbursement of a Direct Loan on or after October 1, 2001
If you are approved for the PAYE Repayment Plan, your student loan payments are capped at 10% of your income that exceeds 150% of the federal poverty line. Thus, you take your monthly adjusted gross income and subtract 150% of the poverty line, which leaves your discretionary income. You multiply your discretionary income by 10% and the remaining amount is your monthly PAYE payment.
A graduate that is enrolled in the PAYE program has up to 20 years to repay his/her debt. Once the graduate has made 20 years of qualified monthly payments, any remaining balance on the student loan is forgiven. As a result, participation in the PAYE program is recommended because it is one of the more beneficial repayment plans.
If you have questions regarding the PAYE program or any other matter related to your student loans, contact DeLadurantey Law Office for an initial consultation today.
If you would like a down-to-earth approach and a lawyer who will listen carefully to all your questions and concern, call DeLadurantey Law Office, LLC,at (414) 377-0518. We serve clients primarily in the areas of student loan law, Chapter 7 and Chapter 13 bankruptcies, debt negotiations and defending foreclosure actions. If you live in the area of Milwaukee, Wisconsin, call us for the debt relief assistance you need. Visit our web site and like us on Facebook.