Our 2022 Revised Pay as You Earn (REPAYE) Student Loan Calculator

Our REPAYE calculator could show you the best way to pay back your student loans in a way that allows you to:

  • Lower your monthly payments

  • Reduce the amount of interest accruing on your outstanding balance

  • Quit putting your life on hold because of your student debt

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REPAYE student loan calculator

What is Revised Pay as You Earn (REPAYE)?

REPAYE is one of the four federally sponsored income-driven repayment plans offered by the United States Department of Education.  It is designed to help those with high levels of debt relative to their incomes a way to make affordable (and reduced) monthly student loan payments that are based on their income.

Launched in December 2015, the plan allows eligible Americans to join a program that allows you to:

  1. Prolong your repayment term to 20 years (if loans are for undergraduate study) or 25 years (if loans are for graduate study)

  2. Make payments worth 10% of your monthly discretionary income

Like with all income-driven repayment plans, your projected monthly payments are calculated by the parameters of the program, rather than the parameters of your unique loan situation.

REPAYE is also designated by the United States Department of Education as a PSLF-eligible qualifying repayment plan.

What loans are eligible for REPAYE?

REPAYE eligibility is wider than PAYE, and includes anyone with federal loans in the following programs:

  • Direct Subsidized and Unsubsidized Stafford Loans

  • Direct PLUS Loans made to graduate or professional students

  • Direct Consolidation Loans, as long as they did not repay any PLUS Loans made to parents

Other federal loan types may participate include loans from the FFEL program, including PLUS Loans made to graduate students, as well as both FFEL Consolidation Loans (that did not repay any PLUS loans made to parents) and Federal Perkins Loans.​

What loans are not eligible for REPAYE?

This leaves only four federal loan types ineligible to participate in the REPAYE program, these being:

  1. Direct PLUS loans made to parents

  2. Direct Consolidation Loans that repaid PLUS loans made to parents

  3. FFEL PLUS Loans made to parents

  4. FFEL Consolidation Loans that repaid PLUS loans made to parents

Of course, private loans are not eligible either.

How does REPAYE calculate my payments?

The formula for calculating your monthly payments within the REPAYE program is similar to how it is done within the other federal income-driven repayment plans.  As it pertains to REPAYE, here's how it will work.

First, take the lesser of your 2021 adjusted gross income and your income.  This is likely to be your AGI, and can be found on your tax return from last year (on Form 1040).

Then, the government will compare your income compared to 150% of the poverty line, taking into account your geographic location, income, and household size.  This calculation is known as "discretionary income."

Essentially, they will then break this analysis evenly across the 12 months in a year.  Your monthly payments will be equal to 10% of this discretionary income amount.

As such, those that show lower adjusted gross incomes on their tax returns will have lower monthly payments. 

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Who is the REPAYE program right for?

The REPAYE program is the most flexible of the four income-driven repayment plans in terms of eligibility.  Generally, it is a good option for those who:

  • Only have undergraduate debt - Those with graduate school loans will find they have a 25-year repayment term rather than 20.  Because of this, those with graduate loans will likely find cheaper payments through IBR, PAYE, or private refinancing.

  • Expect to make a lot more money in the future - You will not lose eligibility for REPAYE even if you make much more money in the future, but your payments could rise to a level that surpasses your standard repayment payments.

  • Are not married - REPAYE can be a costly option for those that are married, since the program will include your spouse's income when determining what your expected monthly payments will be.  If you're married, the other IDR plans will allow you to only consider your income, but only if you don't file your taxes jointly.  Consider working with a tax expert to see how these options could affect you and check out our guide about how marriage affects student loan repayment. 

Additionally, REPAYE may be right for those:

  1. ​That cannot afford standard repayment or IBR

  2. Those working towards PSLF

Those that can't afford Standard or Income-Based Repayment

REPAYE could prove to be a great option for you if you're having trouble keeping up with your existing payments now.  Tied for the lowest expected discretionary income contribution of any income-driven repayment plan (along with IBR and PAYE), at just 10%, your expected payments under REPAYE will be amongst the lowest of any IDR plan.

But if you're looking to accelerate your student loan payoff, you're probably not going to want to use REPAYE.

Those using income-driven repayment to achieve PSLF

REPAYE is a great program to use if you've decided to pursue Public Service Loan Forgiveness Remember, you need to be on a qualifying IDR plan to be eligible for PSLF (IBR, ICR, PAYE, or REPAYE) anyway.  

Using REPAYE may be advantageous in part because your payments will likely be the lowest of any IDR plan.  Combined with the interest subsidy, REPAYE may be the perfect way to hedge your risk in case your PSLF forgiveness application gets denied.

In that instance, you could obviously continue forward in pursuing forgiveness through your IDR plan.

Differences between REPAYE and PAYE

The REPAYE and PAYE programs are the most closely related of all the IDR plans.  For undergraduates, both carry repayment terms of 20 years and monthly payments equal to 10% of your discretionary income.

The main difference between these two programs is REPAYE's interest subsidy, a very generous part of the program that helps to offset the interest that accrues on your loans.

Since many borrowers on income-driven repayment plans have expected monthly payments that are low enough to the point where they do not cover the interest that accrues, your outstanding balance may actually continue to increase even though you are making payments.

Since the end forgiveness balance under IDR may be treated as taxable income, it is important that you try to avoid the continuous accrual of interest if you can.

This is where the REPAYE interest subsidy comes in (more on the subsidy in a minute).

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Pros and cons of using REPAYE

There are a number of pros and cons that you should be really familiar with before you decide to participate in the plan. 

A couple of the most notable are:

  1. The REPAYE interest subsidy

  2. Potentially the lowest payments of any income-driven repayment plan

  3. No partial hardship qualification

Pro: The REPAYE interest subsidy

The REPAYE program offers this interest subsidy as a way to decrease your total repayment costs.  The only IDR plan to offer this interest subsidy, it comes into play when your monthly payments don't fully cover the interest that accrues each month.

So instead of just adding this interest right back onto your balance, the federal government will cover 100% of the accrued interest that remains, for the first three years, if and when this starts happening.  After that, if required, the government will continue to subsidize 50% of the interest for as long as needed.

This is a HUGE help for a couple reasons.

  • If you're using REPAYE for its forgiveness powers, remember that your forgiven balance may be treated as taxable income in the year the forgiveness is granted.  By having less interest accruing each month (and consequently being added to your outstanding balance), you will receive less forgiveness without increasing your monthly payments.  Therefore, if you are taxed on your forgiveness, the interest subsidy will help limit it.

  • The interest subsidy also helps mentally.  Making payments and still seeing your outstanding balance grow each month can be exhausting, but the subsidy can be a small way to help counter that.

Unpaid interest does not capitalize within the REPAYE program, as long as you remain in the program and remember to recertify your income each year.

Of course, as with any of these strategies, there are also some cons to the program that you should be aware of.

 

Pro: Lowers your payments

 

REPAYE, like all income-driven repayment plans, was designed to help borrowers with high debt to income ratios to pay less each month.  Though you'll be making payments for more years (assuming you don't qualify for and are accepted into PSLF), you're likely going to open up hundreds of dollars extra in your cash flow now.  With that money, you may consider:

  • Paying off credit card/consumer/other debt you may have

  • Completing your emergency savings fund

  • Preparing for your other financial goals

  • Save/invest for retirement

When it comes to the power of compound interest, there certainly is a strong argument for investing for your future as you pay off your debt.  Given the power of compounding over a long period of time, you definitely don't want to put it off. 

We can help you run this analysis.

If you're unsure whether REPAYE may be an option for you, head on over and schedule your student loan planning sessionYou'll even receive a plan like the one below.

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Pro: You don't need to demonstrate partial financial hardship

 

Unlike Income-Based Repayment and the Pay as You Earn programs, REPAYE does not require you to prove financial hardship, where your annual loan expenses exceed your 12-month discretionary income.  This is good news, since it expands eligibility to the program to those that may not be able to use any of the other income-driven repayment plans.

Con: You'll pay more in interest

Though you're paying less each month, don't forget that you'll be making years of additional payments, which means that you'll end up paying more in interest than you would have under standard repayment.

But this is true of any IDR plan.  If you can't wrap your head around paying these extra dollars in interest, then you should consider refinancing as a way to lower your monthly payments and your interest rate.

Con: Your payments are not capped by your standard amount

Remember that REPAYE - and all IDR plans for that matter - are complex programs that oftentimes have a lot of moving pieces.

But one downside is the lack of protection you have if your income starts rising quickly.  Now, only you know how likely this is for you, but your expected payments within the REPAYE program are not capped by your original standard payment amount.

What does this mean?

Imagine that your original standard payment amount was $650 per month, which was then reduced to $375 as part of the terms of REPAYE.  As your income rises, so will your payment amount, as is typical with every income-driven repayment plan. 

 

But where REPAYE differs is in the cap.  The other IDR plans would assure that you're never asked to pay more than $650 per month - your original standard amount - at any point during your repayment.

But this protection doesn't exist within REPAYE.

But this may not ever come up for you.  We're not talking about the customary 2-5% raise per year, but more realistically, increases of about $10,000 or more that could pose a problem.

A college student reading a book.

Requesting/Applying for REPAYE

If you've decided that REPAYE is the program for you, all that's left to do is to document and register this decision with the Department of Education.

You're first going to want to complete the Income-Driven Repayment (IDR) Plan Request Form.

This is the same form that you're going to use every single year to "recertify" your enrollment in the plan - this "re-enrollment" process will help the federal government set your expected payments each year.

Remember - you can use this application to apply for any of the four IDR plans, or you can instruct your loan servicer to put you on the payment that carries the lowest monthly payments, but there are times where that may not be the best decision.

Before you apply, you'll need to gather the following information:

  • Your FSA ID

  • Your contact info (email, address, etc.)

  • Spouse's contact info (if married)

  • Your income information

But be extra careful that you do not, under any circumstances, skip your annual certification.  If you do, you're likely to lose credit for all the qualifying months of payments that you have made towards the forgiveness of your federal student loan debt.

At that point, you'll have to start over again.

REPAYE Calculator Frequently Asked Questions

Is student loan forgiveness taxable under REPAYE?

Unfortunately, student loan forgiveness that is granted under the Revised Pay as You Earn program is normally treated as taxable income in the year the forgiveness is granted. 

 

There is a temporary waiver in place until the beginning of 2026 that was enacted by Congress during the Covid-19 pandemic, but whether this waiver will be either temporarily or permanently extended is unclear at this time.

This is most commonly known as the income-driven repayment tax bomb.

How was COVID-19 impacted the REPAYE program?

In response to the COVID-19 pandemic, the federal government is allowing federal borrowers on IDR plans to self report income (through at least 7/31/22).  

This means that, when you complete your annual recertification, you don't need to provide the applicable tax documentation.

Consider refinancing if REPAYE isn't for you

If you're committed to lowering your monthly payments, and REPAYE isn't an option for you, refinancing is always an option for you.  As an alternative to remaining on a federal repayment plan, private refinancing can help you combine and modify the terms of your loan(s) to something more favorable for you.

Since you were exploring REPAYE, it seems safe to assume that you're looking to lower your monthly payments, as opposed to paying more monthly to get out of debt more quickly.  Refinancing can help accomplish this by:

  1. Securing a lower interest rate that saves you extra interest expense

  2. Choosing a longer-term, allowing you to spread payments out over additional years

You may also want to consider referencing a list of other repayment programs that also end in the forgiveness or discharge of your debt.