On December 18, the U.S. Department of Education (ED) announced the reopening of the Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) student loan repayment plans. These Income-Driven Repayment (IDR) plans, which were temporarily closed due to the introduction of the Saving on a Valuable Education (SAVE) plan, offer additional monthly payment options that count towards Public Service Loan Forgiveness (PSLF) and IDR forgiveness.
The PAYE and ICR plans will be available until July 1, 2027.
The reopening of these plans provides borrowers with alternative pathways to affordable repayment and loan forgiveness while the SAVE plan litigation continues.
Borrowers enrolled in SAVE have been placed in a general forbearance with no payments due, no interest accruing, and no credit towards PSLF or IDR forgiveness during this time.
Expert Tip
If loan servicers need extra time to process a borrower’s IDR application (ICR, IBR, PAYE, SAVE), they may place borrowers in a “processing forbearance” for up to 60 days. In this period, no payments are due but interest accrues and the time will count towards PSLF and IDR forgiveness.
After 60 days, if you are still not placed in a repayment plan, your loans are eligible for general forbearance. During this period, no payments are due, no interest accrues, and the time will not count toward PSLF and IDR forgiveness.
Watch your loan servicers carefully and confirm your loan status. If you are accruing interest for more than 60 days in a forbearance, request a general forbearance.
Once enrolled in an IDR plan (ICR, IBR, PAYE), payments will be due, interest will accrue, and payments will count toward forgiveness.
Key Features of PAYE and ICR:
Both plans…
- Calculate payments based on a borrower’s earnings and family size.
- Provide credit towards Public Service Loan Forgiveness (PSLF) and IDR forgiveness.
- Available to Federal Direct Loans only.
PAYE…
- Offers lower payments for those who are eligible. To qualify for PAYE, you must be a new borrower as of Oct 1, 2007, who received at least one Direct Loan after Oct 1, 2011.
- Allows borrowers to make no payments on the first $22,590 of income for single individuals ($46,800 for a family of four) and 10 percent of discretionary income above those amounts.
ICR…
- Provides $0 payments for single individuals earning up to $15,060 ($31,200 for a family of four) and 20 percent of discretionary income above that amount.
- Also has an alternative payment formula that may result in lower payments for borrowers whose remaining student debt is low relative to their income (ie student debt to income ratio less than one).
Read more about ICR and PAYE plans in the Student Debt Center WikiDebt library.
Listen to the recent Veterinary Pulse Podcast on Student Loan Repayment:
VIN Foundation IDR Profiles:
There are four different income-driven repayment eligibility profiles:
- IDR Profile 1: Eligible for ICR, PAYE, SAVE, and the new Income-Based Repayment plan (IBR 2014). This is the most flexible profile with the most beneficial available plans. Generally speaking, you must have graduated from veterinary school in 2018 or later to be in this profile.
- IDR Profile 2: Eligible for ICR, the old Income-Based Repayment plan (IBR 2009), PAYE, and SAVE. This profile is also known as The Pickle. Generally speaking, you must have graduated from veterinary school in 2012 or later to be in this profile.
- IDR Profile 3: Eligible for ICR, IBR 2009, and SAVE. Generally speaking, anyone who graduated from veterinary school in 2012 or earlier would be in this IDR profile.
- IDR Profile 4: Eligible for IBR 2009 only. Generally speaking, anyone who graduated veterinary school in 2010 or earlier could be in Profile 4.
How do I know which IDR Profile I fall into?
The easiest way to find out which income-driven plan profile you’re in is to upload your federal student aid file into the VIN Foundation My Student Loans tool and review the Income-Driven Repayment Eligibility tab.
- Borrowers who are in IDR profile 1 or 2 will be eligible for PAYE
- Borrowers who are in IDR profile 1, 2, or 3 will be eligible for ICR
Read more about IDR profiles in the Student Debt Center WikiDebt library.
Who should consider using PAYE or ICR?
It depends on the plan you’re using now and your IDR profile…
The general case for switching to PAYE or ICR:
- Log progress towards PSLF and IDR forgiveness
- Regular minimum monthly payment due instead of forbearance
- Opportunity to get into a beneficial plan that was previously unavailable
The general case against switching to PAYE or ICR:
- Regular minimum monthly payment due instead of forbearance
- Unpaid interest accrual if your monthly payment is less than your monthly interest accrual
- IDR forgiveness for ICR, PAYE, and SAVE (IDR plans created by ED) is currently blocked pending the SAVE litigation outcome. You can receive forgiveness credit while using PAYE and ICR, but not loan cancellation. You can still receive PSLF while using PAYE and ICR.
- May need to switch to another plan after the SAVE litigation is resolved
Specific case considerations:
- You switched to SAVE since it came online and you’re close to the 120 qualifying payments needed to receive PSLF. You could reach PSLF sooner if you move to PAYE (IDR profile 1 or 2) or ICR if your student debt-to-income ratio is low. Consider IBR 2009 if you are in IDR profile 3.
- You’re several years from reaching PSLF, but you prefer to earn PSLF credit rather than remain in the SAVE forbearance. You can now move to PAYE (IDR profile 1 or 2) or ICR if your student debt-to-income ratio is low. Consider IBR 2009 if you are in IDR profile 3.
- You’re in IDR profile 2 (aka The Pickle), and you didn’t get your loans into PAYE before the previous phase-out. Now is your chance….
- You consolidated your loans for the one-time forgiveness payment count adjustment and need a bit more IDR forgiveness time but missed your chance to get into ICR before it was phased out. Now is your chance…
- If you are using a time-driven plan, ie standard 10-year or 30-year, and you could benefit from a lower payment using an IDR, you now have more options with ICR and PAYE reactivated.
Expert Tip
Checking your Forgiveness Payment Count Adjustment:
Step 1) Log in to studentaid.gov
Step 2) Open a new browser tab and go to https://studentaid.gov/app/api/nslds/payment-counter/summary
The data is available only through this API link at this time. It’s going to look really ugly as it is not formatted well for viewing. If you need help interpreting your payment count, post it anonymously to the Student Debt Message Board available to veterinarians and veterinary students.
SAVE general forbearance
SAVE continues to be blocked while we await the outcome of pending litigation. Anyone who is using SAVE has been placed into a general forbearance. No payments are due, no interest accrues, and no forgiveness credit is granted during the general forbearance period.
The SAVE general forbearance is still a great place for your loans to be. Just because ED reopened PAYE and ICR does not mean you should run to apply. Certain borrowers will benefit from this reopening. Many more will benefit from remaining in the SAVE general forbearance or applying for SAVE to get their loans into the general forbearance, particularly new graduate veterinarians.
However, uncertainty sucks. If you think that SAVE is doomed or that the new administration will make PAYE and ICR unavailable before the extended July 1, 2027 expiration date, then you may want to apply sooner rather than later. To be clear, no published plans are suggesting PAYE or ICR will be eliminated faster than the July 1, 2027 expiration date. Nonetheless, those in IDR profile 2 who are not using PAYE or those whose only forgiveness option is ICR based on their student debt-to-income ratio could be good candidates to act fast.
Lost? Confused? We're Here to Help!
If you’re confused (it’s hard not to be right now), ask questions. Ignoring your student loans is never a good strategy.
You can ask questions on the student debt message board or submit a Student Debt & Income “Signalment” form and we’ll create a new anonymous post to review your loans with you.
We’re here to help!
If you need student debt help, reach out to VIN and VIN Foundation. We have free online tools like the VIN Foundation Student Debt Center and special message board areas to help you make sense of your options. If you have questions on any of the available tools and options, reach out to studentdebt@vinfoundation.org.
Dr. Tony Bartels graduated in 2012 from the Colorado State University combined MBA/DVM program and is an employee of the Veterinary Information Network (VIN) and a VIN Foundation Board member. He and his wife have more than $400,000 in veterinary-school debt that they manage using federal income-driven repayment plans. By necessity (and now obsession), his professional activities include researching and speaking on veterinary-student debt, providing guidance to colleagues on loan-repayment strategies and contributing to VIN Foundation initiatives.
