1. Loan Repayment Options
2013 FSA Training Conference for Financial Aid Professionals

2. Options? Three main plans
Income-Contingent Repayment Plan (ICR) – 1994
Direct Loan Program only
More information available at StudentAid.gov/ICR
Income-Based Repayment Plan (IBR) – 2009
Available in both the Direct Loan and FFEL Program
More information available at StudentAid.gov/IBR
Pay As You Earn Plan (PAYE) – 2012
For new borrowers in FY 2008 who receive new loans in FY 2012
Modeled on IBR, incorporating statutory IBR changes scheduled to take effect for new borrowers in 2014
More information available at StudentAid.gov/PayAsYouEarn

3. Payment Amounts

4. Billy Borrower Billy Borrower:
Is single with no dependents and lives in DC
Has an AGI of $35,000 that rises at 5% per year and
Has $50,000 in Direct Loan debt ($23,000 of which is subsidized), all of which has a 3.86% interest rate

5. Billy Borrower – Comparison
Year
IBR
ICR
PAYE 1
$222
$360
$148 2
$240
$364
$163 3
$258
$369
$178 4
$278
$374
$194 5
$298
$378
$211 6
$319
$383
$229 7
$342
$387
$247 8
$365
$393
$267 9
$390
$398
$287 10
$417
$403
$309 11
$445
$409
$331 12
$474
$414
$355 13
$503
$420
$380 14
$426
$406 15 -
$434 16
$463 17
$493 18 19 20 21 22 23 24 25

6. Billy Borrower – Comparison
ICR
IBR
Pay As You Earn
Initial Payment
$360
$222
$148
Final Payment
$426
$503
Time Of Repayment
13 years, 9 months
15 years, 6 months
19 years, 9 months
Total Paid
$65,198
$69,595
$77,605
Forgiveness $0

7. Public Service Loan Forgiveness (PSLF)
StudentAid.gov/PublicService

8. Public Service Loan Forgiveness
120 qualifying payments
On Direct Loans
On qualifying repayment plans
While working at qualifying employer
Borrower must also be employed by a qualifying organization at the time that the borrower applies for and receives PSLF
According to the IRS, the forgiven amount is not treated as taxable income

9. PSLF – Borrower Example
Without PSLF:
ICR
IBR
Pay As You Earn
Time in Repayment
13 years, 9 months
15 years, 6 months
19 years, 9 months
Total Paid
$65,198
$69,595
$77,605
Plan Forgiveness $0
With PSLF:
ICR
IBR
Pay As You Earn
Time in Repayment
10 years
Total Paid for PSLF
$45,700
$37,541
$26,788
PSLF Amount
$18,064
$28,777
$41,671

10. QUESTIONS?