If a PSLF borrower switches from IBR to PAYE repayments in 2015—i.e. if PAYE is successfully extended to the old borrowers—will the borrower need to re-start making 120 payments from square one? Put another way, will the IBR repayments previously made still count towards the 120 payments required for loan forgiveness?  [If the old payments will not count, we are better off just staying on the IBR and not switching to PAYE.]

Thank you for your help, Heather.

Hi,

From what I understand (and have sought an answer for the same question through the FedLoan Servicers), all payments would count because both IBR and PAYE are qualifying payment plans. However, you should consider that to switch the plans, assuming you’d be eligible, you have to effectively disenroll from the IBR and then make one qualifying payment at the rate for a standard 10-year monthly repayment before being able to enroll in the new plan. They said you may be able to reach some agreement as to a lower amount but I don’t know what that would be.

Aaron