What is a Partial Financial Hardship?
Borrowers must be experiencing a Partial Financial Hardship to be eligible for the Income Based Repayment Plan or Pay As You Earn Plan.
Borrowers are experiencing a partial financial hardship if their annual loan repayments on a Standard (ten year) Repayment Plan are greater than the annual repayment they would be required to make under IBR or PAYE.
To calculate an IBR or PAYE repayment amount, use the on-line calculators at your loan servicer's website or at www.studentloans.gov or www.finaid.org. Compare this monthly repayment with the monthly repayment determined under the Standard (ten year) Repayment Plan. If you have loans accruing interest at different interest rates, input into the calculator the total for the same interest rate loans separately. Add the two repayment amounts to get an estimate of your payments under the Standard (ten year) Repayment Plan.
If your payment under IBR or PAYE is less than your payment under the ten-year plan, based on the greater of the amount you owed on your loans when the loans initially entered repayment or the amount you owe at the time you request IBR or PAYE, you are experiencing a partial financial hardship and meet that eligibility requirement for IBR or PAYE.