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IBR, PAYE, and REPAYE Calculations for Multiple Loans and Multiple Lenders

If you have multiple federal student loans or you are stuck with more than one federal servicer, the Income-Driven Repayment math might seem complicated. Fortunately, it is pretty easy.

Written By: Michael P. Lux, Esq.

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The basics of income-driven repayment (IDR) plans are pretty well understood by most borrowers. If you sign up for IBR, PAYE, or REPAYE you make payments based upon how much you earn. For many borrowers, this means dramatically reduced monthly bills.

Things get complicated when you have multiple loans. Do you apply for IDR with each lender? What if one loan servicer has just one small loan? Can you get IBR for your tiny loans or just the big ones?

Today we will be answering those questions and more in the form of a simple example.

Multiple servicer, multiple loan example

Suppose your luck is terrible you have four federal student loans serviced by four different companies. Based upon the standard federal repayment plan, you have to make the following payments:

  • Company A: $200 per month
  • Company B: $100 per month
  • Company C: $50 per month
  • Company D: $50 per month

Based upon your monthly income and other bills you find it pretty easy to make the payments to Company C and D, but in total, you are expected to pay $400 per month. That $400 in total is just too much to be paying.

Investigating a lower monthly payment

Suppose you use the studentaid.gov loan simulator and find out that based upon your income and family size, your monthly payments can be $80 per month if you sign up for REPAYE.

Many people worry that their payments with Company A and B would go down to $80 each, but that the payments with Company C and D would stay the same. It helps your payments a bit, but doesn’t make a huge difference.

The good news here is that the $80 that the government decides you can afford means $80 towards all of your federal student loans (Note: private loans are not a part of this process… they don’t even enter in the calculation for how much you can afford). That means that instead of paying $400 per month on your federal student loans, on REPAYE it gets reduced to $80 total.

What lender gets what?

When your payments are reduced, each payment drops by the same percent. If you are starting to freak out about the math, it isn’t necessary. Just make sure each company is aware of all the others and they should make the necessary adjustments.

However, if you want to see what the math looks like, we can do that too…

Company A normally got $200 per month out of the $400 total that you paid.  200/400 = .5  Take the .5 that you just calculated and multiply it by your new REPAYE number, in this case, it is $80… 80*.5 =  $40 Thus you will owe $40 per month to company A.

Doing the same calculations for the other companies we get $20 per month for Company B, and $10 per month for Company C and Company D.

Thus, your total payment for all four loan servicers is the $80 per month.

Keeping your loan servicers accountable

When you submit IBR or PAYE paperwork, you will learn what your new total monthly payment is.

If you add up all of your new payments with all the loan servicers and find that you are paying more than that total monthly payment number, it means one of them messed up the math, or isn’t aware of the other companies out there.

Just remember… that IBR, PAYE, or REPAYE number is the total… if you are paying more, it means you need to get something fixed.

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

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