‘Pay As Your Earn’ gets lots of attention, but it isn’t the best way for many of us to repay our student loans
I paid them off the boring way: I wrote a check every month. Then I took a bit of time off from my repayment schedule when I was unemployed. Eventually I wrote a bigger check and I was done.
Since then, the government has added more repayment options, including programs that can actually forgive a portion of unpaid loans after a couple of decades. (If you know anything at all about student loans, you know that they are virtually never forgiven. Unpaid student loans stick with people through bankruptcy and retirement.)
One of these, the Pay As You Earn option (PAYE), is the result of a YouTube video that then-candidate Barack Obama made in 2011, promising college students wouldn’t have to devote more than 10% of their discretionary income to student loan payments.
Under current rules you’re eligible for PAYE if you are repaying direct subsidized and unsubsidized loans, direct PLUS loans made to students, and/or direct consolidation loans that do not include PLUS loans made to parents.
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