The Pay As You Earn (PAYE) plan is a federal loan repayment plan that falls under the umbrella of income-driven repayment (IDR).
The monthly payment amount for PAYE is based on 10% of your discretionary income. The monthly payment amount is capped at what it would be under a 10-year Standard plan.
The remainder of your loans can be forgiven after 20 years of making payments in the PAYE plan. The amount that’s forgiven may be taxed as income.
To be eligible for PAYE, your monthly payment on IBR needs to be lower than it would be under the 10-year Standard plan. This is sometimes called the “partial financial hardship” requirement.