- Borrowers are reporting the PAYE plan is missing from the online IDR application for some users.
- The Department of Education has focused on streamlining the application to prevent ineligible borrowers from applying, removing the option for some.
- Online application processing times appear to be improving, with some borrowers reporting decisions in as little as a week.
The Pay As You Earn (PAYE) repayment plan has quietly vanished from some borrowers’ repayment application options on StudentAid.gov, prompting questions about whether the Department of Education has made behind-the-scenes changes to eligibility screening or removed the plan for some borrowers without public notice.
There are no policy changes surrounding PAYEbut rather the online application is using a new logic screening to only allow users to choose plans they are eligible for. According to sources, this is designed to “reduce points of friction so borrowers don’t get rejected”.
One borrower reported seeing PAYE listed in a dropdown labeled “Unavailable Plans,” highlighting the new eligibility filters before presenting options.
Another borrower, who was eligible for PAYE, reported the plan was listed normally. The inconsistency has raised concerns that borrowers may not understand why a plan is missing from their options, or whether the form is functioning as intended.
While the PAYE plan remains authorized under federal law and has not been formally discontinued, there are ongoing questions about whether PAYE forgiveness is allowed, and some borrowers are wondering whether to switch plans as a result.
No Policy Changes, Just Online App Improvements
While the Department of Education has not issued any new guidance or public notice about changes to PAYE, a source said that new backend logic has been introduced to the application platform. This logic may now screen borrowers based on eligibility rules, preventing ineligible applicants from selecting PAYE before submission.
That approach reflects ongoing efforts by student loan servicers and the Department of Education to reduce errors and lower the number of applications that result in rejections. IDR plan eligibility is based on a mix of loan type, disbursement date, and whether a borrower has previously used certain repayment plans.
However, in cases where a borrower should be eligible for PAYE and the online application is not offering that option, a paper IDR plan application can still be submitted.
PAYE Plan Features And Eligibility
The PAYE repayment allows borrowers to repay their student loans based on their income. The monthly payment amount is set at 10% of your discretionary income.
To qualify for the PAYE (Pay As You Earn) repayment plan, borrowers must meet all of the following conditions:
1. Timeline Requirements
Must be a new borrower as of Oct. 1, 2007. This means the borrower must not have had any outstanding federal student loans at that time.
Must have received a disbursement of a Direct Loan on or after Oct. 1, 2011.
Both conditions must be true. Even a small outstanding balance from a loan before Oct. 1, 2007, will disqualify a borrower from PAYE.
2. Loan Type Requirements
Only Direct Loans qualify. This includes: Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans made to graduate students, Direct Consolidation Loans (but only if they don’t include Parent PLUS loans or consolidation loans that paid off Parent PLUS loans).
FFEL loans, Perkins Loans, and Parent PLUS loans are not eligible unless consolidated into a Direct Consolidation Loan, and even then, if a Parent PLUS loan is in the mix, PAYE is not allowed.
3. Partial Financial Hardship Requirement (at the time of enrollment)
Borrowers must have a partial financial hardship when they first enter PAYE.
This means that the payment amount under PAYE would be less than under the Standard 10-year Plan.
This condition only needs to be met at the time of entry into the plan. Borrowers may remain in PAYE even if they no longer meet this condition in later years.
What Borrowers Need To Know
For now, PAYE remains a legal repayment option. Borrowers who don’t see it listed on their online application but believe they’re eligible can still submit a paper form, speak with their loan servicer, or try a different browser or session to ensure it’s not a display glitch. The paper form includes a manual selection for all eligible repayment plans.
In positive news, borrowers are reporting that IDR applications submitted through the online portal are being reviewed and processed much faster than before. In some cases, users say they have received confirmation of new payment plans within a week of submission, which is in stark contrast to the wait times expected for the backlog of paper applications.
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