Based on my understanding, the only difference is that for IBR, you qualify for either 20 or 25 years forgiveness based on when you took out your loan. Oh, and for the first three years IBR forgives any unpaid interest above the 10% income payment required.
Everything else seems to be the same:
– payments capped at 10% of income but can never be more than the standard 10y repayment
– interest accrues (after year 3)
– forgiveness after 20 years if your loan is after 2014
So why remove it?
Why was PAYE removed if IBR is exactly the same as the old PAYE (after 3 years)?
byu/fenwalt inStudentLoans
Posted by fenwalt
3 Comments
Budget. PAYE included more borrowers.
PAYE was created by the department of ed, not congress. The OBBBA gets rid of the department’s ability to create new plans and stops the use of the previously created ones by July 2028.
Currently PAYE does not have an interest subsidy because of the court injunction.
IBR only has one for subsidized loans for the first three years on the plan.
PAYE also had different eligibility rules. A borrower can’t have had loans before October 2007 and must have consolidated or taken at least 1 loan out after October 1, 2011.
There are 2 versions of IBR. Both will still exist.
Old IBR is for borrowers who borrowed loans before July 1, 2014. It uses 15% of the borrower’s discretionary income to calculate payments and offers forgiveness after 25 years in repayment (300 months).
New IBR (2014) is for borrowers who FIRST borrowed loans after July 1, 2014. It uses 10% of the borrower’s discretionary income to calculate payments and offers forgiveness after 20 years in repayment (240 months).
So some Old IBR borrowers can be eligible for PAYE.
> forgiveness after 20 years if your loan is after 2014
PAYE is always 20 year forgiveness, 2014 means nothing in the context of PAYE