The U.S. Department of Education has reopened two student loan repayment plans, Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR), to provide borrowers with more options for managing their payments. These plans are now available to those eligible under the Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR) programs.
"The Department continues to defend in court the authority to cut payments for borrowers with high debts and low incomes through the SAVE Plan," stated U.S. Under Secretary of Education James Kvaal. "In the meantime, we are making more options available to low-income borrowers, teachers, servicemembers, and other public servants so they can make the best choices for their financial situation."
Both PAYE and ICR are part of the Department's IDR plans, which determine monthly payments based on a borrower's earnings and family size. These plans have been crucial for many public servants aiming for PSLF after ten years of service.
Applications for PAYE and ICR can be submitted at StudentAid.gov/idr by logging into a StudentAid.gov account and uploading necessary income information.
Initially established in 2012 and 1996 respectively, PAYE and ICR were closed last summer due to the Biden-Harris Administration's introduction of the SAVE Plan. However, recent court rulings have altered repayment terms significantly.
The administration is actively defending its SAVE Plan in court while adapting systems to comply with judicial orders. Borrowers currently enrolled in SAVE have been placed in forbearance temporarily, meaning they do not owe payments or accrue interest but do not receive credit toward PSLF or IDR during this period.
Once enrolled in new repayment plans by servicers, borrowers will resume payments that contribute towards PSLF and IDR credits. If additional processing time is needed by servicers for PAYE or ICR applications, a processing forbearance of up to 60 days may be applied where no payments are required but interest accrues.
PAYE offers no payments on initial income levels up to $22,590 for individuals ($46,800 for families of four) with 10% charged on amounts above these thresholds. Meanwhile, ICR provides $0 payments up to $15,060 individual earnings ($31,200 family earnings) with 20% applied beyond this amount; it also includes an alternative formula potentially beneficial depending on debt-to-income ratios.
Regulatory changes authorizing new enrollments take effect immediately with availability lasting until July 1, 2027.
For further details regarding the SAVE injunction visit ed.gov/save.
