Hey all,
I apologize if this has already been asked, but I’m reading the amendments made towards student loans, and I’m a bit stuck on this one sentence in particular.
“The percentage of a borrower's AGI used for the monthly payment calculation follows a sliding scale based on AGI and ranges from 1% to 10% for AGIs of greater than $10,000, with the applicable percentage increasing by one percentage point for each increment of $10,000 in AGI. For AGIs of $10,000 or less, the monthly payment is $10.”
So, from what I understand, anyone who makes over $10k repays somewhere between 1-10% of their AGI for that month (I’m assuming the 1-10% refers to AGIs of 10-100k). In the event someone makes, say, $120k, would that mean their repayment percentage is 12% of their AGI? Do I understand this correctly? Thank you so much!
Posted by Far_Caterpillar6806
6 Comments
It’s 10% for everything above 100k
No, it maxes out at 10% for high income earners.
If youre MFJ your income gets added for the calc even if you each have student loans. A married couple making measly median salaries lose 1/5 of household income going to loans, yay! 2 people making 50k/ea – those are some high earners!
On RAP, borrowers making between $0 and $10k would have a minimum $10 monthly payment, not $0. Any higher than $10k AGI and it would start using a specific percentage of your income to calculate payment. $10k-$20k would use 1% of your AGI yearly (divide by 12 and subtract $50 for each dependent to get your monthly payment). $20k-$30k would use 2% of your AGI yearly (divide by 12 and subtract $50 for each dependent to get your monthly payment). $30k-$40k would use 3% of your AGI yearly. Keep adding 1% for every 10k of income. Rinse and repeat. The limit is 10% for anyone making over 100k.
Note based on AGI not disposable income (as in IBR)
A person earning $90k pays 9% of their AGI, $100k pays 10% of AGI, $120k also pays 10% of AGI.
So really, for someone earning $100k+, there is no reason to be in RAP vs IBR. RAP has stipulations that you can’t switch out of it once you’re in it.