There's yet another way to pay back student loans without going broke. It's called REPAYE.
In December, the Department of Education launched its eighth college-loan repayment program, dubbed the Revised Pay As You Earn Plan.
"Helping student borrowers manage repayments so that loan debt is not a deterrent for pursuing higher education has been a central theme for President Obama's higher-education agenda since the beginning of this administration," Secretary of Education Arne Duncan said when the program began.
An older program, Pay As You Earn, caps payments at 10 percent of a borrower's monthly income and forgives any remaining balance on student loans after 20 years of qualifying repayment.
But PAYE was only for borrowers as of October 2007. REPAYE expands the option to anyone with federal student-loan debt. (Private student-loan debt is a whole other nightmare.)
REPAYE also limits monthly loan payments to 10 percent of discretionary income - the difference between your adjusted gross income and 150 percent of the poverty level for your state and family size.
To enroll in the program, visit www.StudentAid.gov/IDR, or contact your loan servicer and request to be enrolled.
Now, let's go into the weeds of the seven other repayment plans. They have different eligibility requirements, but here are the bare bones of each:
Standard Repayment Plan. Payments are fixed (the same amount due each month). Time frame: up to 10 years.
Graduated Repayment Plan. Payments are not fixed, start off low, then increase every two years. Time frame: up to 10 years.
Extended Repayment Plan. Payments can be either fixed or graduated. Time frame: up to 25 years.
Income-Based Repayment Plan. Payments are not fixed, but capped at 15 percent of your discretionary income. Payments fluctuate as your income rises or falls. Time frame: up to 25 years.
Pay As You Earn (PAYE) Plan: Very similar to the Income-Based Repayment Plan, except monthly maximum payments are capped at 10 percent instead of 15 percent of discretionary income. PAYE was created as part of the Obama administration's Student Loan Forgiveness Program. Payments fluctuate as your income rises or falls. Time frame: up to 20 years.
Income-Contingent Repayment Plan: Payments are recalculated annually, based on your adjusted gross income, family size, and total loan debt. Payments fluctuate as your income and debt load changes. Time frame: up to 25 years. Debt balance forgiven after that.
Income-Sensitive Repayment Plan: Monthly payments fluctuate based on annual income. Time frame: up to 15 years. Very similar to Income-Contingent, but much shorter.
Why isn't there just one way to pay back loans?
Craig Lemoine, associate professor of financial planning at the American College of Financial Services, agrees the system is way too complicated.
However, "as college got more expensive, the government expanded these repayment programs to make them more sensitive to income."
REPAYE is "the most flexible," he says. "It's the newest, and almost everyone is one eligible," including recent borrowers and past borrowers.
"It takes into account singles who can't find a job right away or work at Starbucks and those with families," he adds.
Still no luck? If you've contacted your loan servicer and still don't have a way to pay your student loans, the Department of Education has a Federal Student Aid Ombudsman Group you can contact.
The Ombudsman Group is a neutral and confidential resource to help resolve disputes about federal student loans.
By mail, write to: U.S. Department of Education, FSA Ombudsman Group, Box 1843, Monticello, Ky. 42633. By phone: 1-877-557-2575.
Seeking financial aid? Whatever you do, don't pay to find financial aid.
We've seen TV-advertised services and websites offering paid help filing the Free Application for Federal Student Aid (FAFSA) for a fee. These sites are not affiliated with or endorsed by the Department of Education.
The official form is available at fafsa.gov, and you can get free help from the financial-aid office at your college or the college you're thinking about attending.
If you are asked for your credit-card information while filling out the FAFSA online, you are not at the official government site. Remember, the official website has the .gov suffix.