Hello,

Just learned about the planned revisions to the PAYE program, and would like to clarify some details.  Background: my wife and I met in grad school (a VERY expensive one, unfortunately) and as one may guess, have massive loan payments.  We are currently on income based repayment plans.  Our income fluctuates as some of our work is production based (not a set salary).  Though we usually make our payments based on the 10-year schedule, the reduced payment plan gives us the flexibility to pay less in months when we have lower income or unusual expenses.  Our normal payments equate to 70-80% of our discretionary income, so a “small” fluctuation in income can have a large effect on how much we are able to pay.

My first question, does the 50% interest cap apply only to months when the actual payment made is less than the accrued interest?  Or will the interest automatically be capped according to the predetermined minimum payment, regardless of how much is actually paid? Specifically, if we pay more than the interest accrued in a month, would we still benefit from the cap?  Our calculated minimum payments would only cover about 30% of monthly interest, so a 50% break on the remainder would be a very substantial savings for us.

Second question, if spouses’ incomes must be included for this new program, will their student loan payments also be considered when calculating monthly payment amount?

Yeah This This This.  I’m in IBR and public service.  7 years left.  Was hoping to get married and file separately.  I just proposed a month ago.  This has me going crazy.