Have you been wondering if the new Repay program might benefit you? Jan Miller, nationally renowned student loan consultant was on Physician Financial Success and he tells Josh about the differences in IBR and Repay. The exciting news is that with IBR, it lowers your payment based on 15 percent of your discretionary income and the new Repay Program lowers that 10, so effectively this new program potentially can lower your payment another 33 percent, which increases the amount that you could potentially have forgiven if you qualify for the Public Service Loan Forgiveness Program. This clip is under 3 minutes, so give it a listen.
Jan Miller: The program is kind of a hybrid between IBR and Pay As You Earn, so let me just explain those programs briefly because understand in Repay you have to first understand the income-based repayment program, which typically especially for physicians who have been in school long enough that is the typical program that they qualify for that lowers their payments based on their income rather on the balance interest rate of the loan.
Josh Mettle: Right.
Jan Miller: Especially of course this is valuable in residency where you have a much lower income in comparison to the size of your debt, and it’s usually beneficial to be able to lower your payment towards – based on your income instead of having to pay what your standard payment would be, which can be thousands of dollars a month. Who can afford that when you’re living on a residency salary or you know if you’re in any other type of position where you start out you don’t come out the gates out of school, making tons of money. You might be starting your practice or your business or whatever, and there is an interim there where you’re trying to establish your career and the program is excellent for that.
In addition to that, there’s a forgiveness component to the program, in which, in all of these programs, in which after a certain number of years and of course if you qualify for the Public Service Loan Forgiveness Program, if you work for a nonprofit or government agency, you can have the loan forgiven tax-free in 10 years. The idea is to lower your payment is through the income-based repayment program, the more you are going to have forgiven at the end of those 10 years, so the less you pay out overall on the life of your loans.
Well, the IBR program, which is available to pretty much all borrowers who aren’t parents because Parent PLUS Loans do not qualify for the IBR Program. They may qualify for a different program called income contingent repayment, but I don’t want to get too crazy with the details. I’ll just stick with IBR. With IBR, it takes basically lower your payment based on 15 percent of your discretionary income and the new Repay Program lowers that 10, so effectively this new program potentially can lower your payment another 33 percent, which increases the amount that you could potentially have forgiven. I’m sorry the story is too long there, but‑
Josh Mettle: No, it’s perfect.
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