Repaye Loan Subsidy Charts
The subsides can be valuable!
Below are charts which illustrate the value of the REPAYE interest rate subsidies. There is also a video walkthrough at the bottom of the page, which illustrates the concept using our calculator (where you can use your own specific loans to calculate your subsidies).
If you select REPAYE as your income-driven repayment plan, the government will actually pay at least half of any interest your payments do not cover. This subsidy is not dependent on the Public Loan Forgiveness Program, you don’t need to be in a qualifying job, and you get the benefits immediately.
The first chart shows the actual annual dollar amount of your subsidy as function of loan balance and adjusted gross income. This is the amount of annual interest which is paid on your behalf, and which you will not end up paying. This has the net effect of reducing your “effective interest rate”. You can think of your effective interest rate as the interest rate you are actually paying (while the government pays the rest). Your effective interest rate is shown on the second graph down below. You can use this effective interest rate for helping to determine if you should refinance your loans to a private loan (assuming you have no chance for PSLF).
These charts assume that:
1) You are single (i.e. have a “family size” of one)
2) Live in the continental US
3) Have only or predominantly un-subsidized Federal loans at a 6.8% interest rate.
If you are married, have children, etc, then your subsidies will be slightly larger due to larger “family size”. Also, if you have any subsidized loans, your interest subsidy will be higher for the first three years in which you select REPAYE. Also note, that if your interest rates are lower than 6.8%, your subsidies will be smaller than what’s in the charts.
Also note, the shaded lines below represent the typical salary/AGI range for most residents and fellows. Remember that Adjusted Gross Income depends primarily on your salary MINUS items like health insurance premiums and 401k/403b contributions (e.g. Box 1 on your W2).