Under the Revised Pay As You Earn (REPAYE) plan, your monthly payments are generally set at 10% of your discretionary income. Discretionary income is calculated as the difference between your adjusted gross income (AGI) and 150% of the poverty guideline for your family size and state of residence.
For example, let's say your AGI is $50,000 and you live in a state with a poverty guideline of $20,000 for a family of two. To calculate your discretionary income, you would subtract 150% of the poverty guideline from your AGI:
$50,000 - (1.5 x $20,000) = $20,000
Your monthly REPAYE payment would be 10% of this amount, or $166.67.
It's important to note that under REPAYE, there is no cap on your monthly payment amount. This means that if your income increases significantly, your monthly payment could potentially be higher than it would be under other Income-Driven Repayment (IDR) plans like Income-Based Repayment (IBR). However, the repayment term is generally shorter under REPAYE than under IBR, so you may end up paying less in total interest over the life of the loan.
