Refinance rates with Laurel Road start at 1.89%.
Checking your rates won’t affect your score.
Income-driven repayment plans can bring you financial relief by lowering the monthly payments on your student loans. But with four different plans to choose from, how do you know which income-driven repayment plan is best for your situation?
After all, at first glance, they look remarkably similar:
But while these plans share a lot of similarities, they also have some key differences that could make a major impact on how much you pay each month.
Here are some tips on choosing the best income-driven repayment plan for you, depending on your individual circumstances.
To find out which income-driven repayment plan is best for you, click on the link below if …
- …You want the lowest monthly payment
- …You borrowed loans after Oct. 1, 2011
- …You borrowed loans after July 1, 2014
- …You expect your income to increase significantly over time
- …You’re married and file taxes together with your spouse
- …One or more of your loans was used for graduate school
- …You have a parent PLUS loan
Income-driven plans adjust your monthly payments based on your income and family size. To calculate your monthly payment, most plans look at your discretionary income, which is defined as the difference between your overall income and 150% of the federal poverty guideline.
For example, the 150% guideline for a single person in 2021 is $19,320. So, if you make $30,000, your discretionary income would be $10,680. On an income-driven plan, your payment would be capped at 10%, 15% or 20% of that total, or between $1,068 and $2,136.
If you’re looking for the lowest monthly payment, PAYE or REPAYE could be your best options, since they cap your bills at 10% of your income. IBR could also reduce your payment to 10%, but only if you were a new borrower on or after July 1, 2014.
While this consideration still leaves you with several options, it’s a good place to start. What’s more, Federal Student Aid can help you find a plan with the lowest payment when you submit your application.
When you fill out your application, you can choose “I want the income-driven repayment plan with the lowest monthly payment” so the system can choose the right plan for you. With this option, you don’t have to figure out which income-driven repayment plan is best for you; your loan servicer will pick for you.
But if you want to understand why one plan stands out over another, read on to learn about some more important differences among the income-driven repayment plans.
Although the PAYE plan, along with REPAYE and IBR, can reduce your payments to 10% of your discretionary income, you can only qualify if you borrowed student loans at the right time.
To be eligible for PAYE, you can’t have had an outstanding balance on a direct or FFEL loan on or after Oct. 1, 2007, while your current direct loans need to have been disbursed on or after Oct. 1, 2011. If you received loans before this date, you can’t qualify for PAYE.
So if you’re a relatively new borrower, PAYE could be the best income-driven repayment plan for you, as it lowers your monthly payment to 10% and caps your repayment term at 20 years (the other plans can go up to 25).
If your loans are older, though, you’ll probably gravitate toward one of the other income-driven plans instead.
In addition to Oct. 2011, you should also pay attention to a second date: July 1, 2014. The IBR plan also considers when you borrowed your student loans, and if you borrowed after this date, your payment will be capped at 10%, with a repayment term of 20 years.
Unfortunately, if your student loans predate July 1, 2014, your monthly bill will be 15% of your income. What’s more, your term will span 25 years, leaving you in debt for an additional five years before you see any loan forgiveness.
So not only will you have more to pay each month compared to a post-2014 borrower, but you’ll pay extra interest since you’ll be in debt for five additional years. If your loans are pre-2014, then PAYE or REPAYE would likely save you more money than IBR.
While you should consider which is the best income-driven plan for saving money today, it’s also important to look into your financial future.
Most plans require you to recertify your eligibility on an annual basis, and they adjust your payments if your income or family size changes.
If your family grows but your income stays the same, for example, your payment might go down. But if the opposite happens and you start making more money, your monthly payment could increase as a result.
On the REPAYE plan, your monthly payment could increase without limit. If your income suddenly doubles, your student loan bill could do the same. In fact, you could even end up paying more on this plan than you would under the standard 10-year plan.
But PAYE and IBR don’t let this happen, as they have a built-in cap to your monthly payment. No matter how much your income grows, your monthly payments will never exceed the amount you would pay on the standard 10-year plan.
These plans can be especially helpful for doctors, who make a relatively low salary while in residency but then see a big jump in income as they move further along in their careers. If you expect to see your income rise in the future and want to keep your student loan payments low, PAYE or IBR would likely be a better option than REPAYE.
When choosing the best income-driven repayment plan, another consideration is your marital status. The REPAYE plan takes both your and your spouse’s income into account when you apply, even if you file taxes separately. Combining incomes could mean your student loan bill gets a lot higher.
But PAYE and IBR don’t take spousal income into account if you file separately, so your payment will remain based on your income, and only your income. If you file taxes jointly with your spouse, both your incomes will be taken into account, regardless of which income-driven plan you choose.
If you’ve still got a balance left over after 20 or 25 years on an income-driven repayment plan, the remainder may be forgiven. You’ll have to pay taxes on the forgiven amount, but otherwise you can kiss that student loan debt goodbye.
However, the amount of time until your loans are forgiven could vary depending on whether they were used for your undergraduate education or for graduate school. If you have even one graduate school loan, your terms on REPAYE increase to 25 years, rather than the 20-year term for undergraduate loans.
So before choosing REPAYE, consider what you used your loans for. If they were graduate school student loans, REPAYE would switch from being one of the most affordable options to one of the more expensive ones. In this case, you might want to look at PAYE or IBR instead.
If you’re looking to put a parent PLUS loan on income-driven repayment, your choice is easy: Pick the ICR plan. That’s because ICR is the only plan that parent PLUS loans qualify for — though you’ll have to consolidate them first.
To make your parent PLUS loan eligible for ICR, you first must apply for direct loan consolidation. Then you can choose the ICR plan, which adjusts your bill to 20% of your discretionary income and offers loan forgiveness after 25 years of on-time repayment.
Finding the best income-driven repayment plan for you
So, which is the best income-driven repayment plan? For most borrowers, REPAYE, PAYE, or IBR are better options than ICR, since they could give you lower monthly payments.
And PAYE seems to have a slight edge over REPAYE and IBR, since it lowers your payments to 10% and sets your term at 20 years, rather than 25. But to qualify for PAYE, you must be a relatively new borrower. Those with older student loans could do better with another plan.
Whatever you choose, remember that you must recertify your eligibility every year to stay on the plan. At this time, you can also switch to a different income-driven plan if your current one no longer meets your needs.
At the same time, don’t forget that lowering your bills and extending your terms means you pay more interest in the long run. Although an income-driven plan could save your finances today, you might consider other strategies for paying off your debt in the future.
Before restructuring your debt, use our income-based repayment calculator to estimate exactly what your new repayment plan will cost. By crunching the numbers, you’ll have a clear sense of the short- and long-term effects of changing your student loan repayment plan.
Interested in refinancing student loans?Here are the top 9 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.88% – 6.15%1||Undergrad & Graduate|
|1.88% – 5.64%2||Undergrad & Graduate|
|2.50% – 6.85%3||Undergrad & Graduate|
|1.89% – 5.90%4||Undergrad & Graduate|
|2.25% – 6.39%5||Undergrad & Graduate|
|1.88% – 5.64%6||Undergrad & Graduate|
|1.90% – 5.25%7||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|2.13% – 5.25%8||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of June 1, 2021.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Interest Rate Disclosure
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.59% APR to 5.79% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.88% APR to 5.64% APR (excludes 0.25% Auto Pay discount). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 36% (the maximum allowable for these loans). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 2.04% and 5.8% to the one month LIBOR. Earnest rate ranges are current as of 6/8/2021, and are subject to change based on market conditions.
Auto Pay Discount Disclosure
You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
Student Loan Refinancing Loan Cost Examples
These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit earnest.com/licenses for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.
One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.
© 2021 Earnest LLC. All rights reserved.
3 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.
4 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
5 Important Disclosures for SoFi.
Fixed rates from 2.74% APR to 6.74% APR (with autopay). Variable rates from 2.25% APR to 6.39% APR (with autopay). All variable rates are based on the 1-month LIBOR and may increase after consummation if LIBOR increases; see more at SoFi.com/legal/#1. If approved for a loan your rate will depend on a variety of factors such as your credit profile, your application and your selected loan terms. Your rate will be within the ranges of rates listed above. Lowest rates reserved for the most creditworthy borrowers. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license #6054612; NMLS #1121636 (www.nmlsconsumeraccess.org). Additional terms and conditions apply; see SoFi.com/eligibility for details. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
6 Important Disclosures for Navient.
7 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 04/07/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.
8 Important Disclosures for PenFed.
Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.13%-5.25% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.