"For your typical undergraduate borrower, payments under an IDR plan will be going down about two-thirds," says Travis Hornsby, a chartered finanical analyst (CFA) and founder of Student Loan Planner.Ĭurrently, your monthly payments are capped at 10% of discretionary income, which is the amount of money you have available to spend on the things you want after covering fixed expenses, Hornsby explains.ĭiscretionary income is calculated using 150% of the federal poverty level guidelines. The changes could reduce some of them to zero. The plan calculates monthly payments based on a borrower's discretionary income. The Education Department this month introduced new regulations that would amend the terms of an income-driven repayment (IDR) plan known as Revised Pay as You Earn, or REPAYE. With the focus of many student loan borrowers on the court challenges against President Joe Biden's broad-based forgiveness plan, the administration is working on a separate proposal that could dramatically reduce payments. By clicking ‘Sign up’, you agree to receive marketing emails from InsiderĪs well as other partner offers and accept our
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