Which Plan Meets Luca’S Desire For Federal Loan Payments Under $200 For The First Few Years?
To help Luca find a federal loan repayment plan with payments under $200 for the first few years, he could consider the Income-Driven Repayment (IDR) plans offered by the federal government. Among the IDR plans, the Income-Based Repayment (IBR) plan or the Pay As You Earn (PAYE) plan are the most suitable options. These plans calculate monthly payments based on a percentage of the borrower's discretionary income, which typically results in lower initial payments, especially for borrowers with lower incomes or high student loan balances. Here's a brief overview of each plan: Income-Based Repayment (IBR) Plan : Under the IBR plan, borrowers' monthly payments are set at 10-15% of their discretionary income, depending on when the loans were disbursed. Payments are capped at the amount the borrower would pay under a standard 10-year repayment plan. For new borrowers on or after July 1, 2014, payments are capped at 10% of discretionary income. Any remaining balance on the loa