Statutory Calculation Methodology

Prexvo compiles deterministic financial models based directly on Title IV of the Higher Education Act and Department of Health and Human Services regulations.

1. Repayment Assistance Plan (RAP) Mechanics

Pursuant to 34 CFR Part 685, RAP establishes a protected income threshold equal to 225 percent of the applicable HHS Poverty Guideline. Discretionary income is calculated as adjusted gross income minus this protected threshold. Borrowers pay 10 percent of discretionary income divided by 12.

When monthly payment obligations are insufficient to satisfy accrued monthly interest, the federal government covers 100 percent of the unpaid interest. Unpaid interest never capitalizes into loan principal.

2. Income-Based Repayment (IBR) and PAYE Statutory Caps

Under HEA Section 493C and 34 CFR 685.221, monthly obligations under IBR are legally capped at the 10-year Standard Repayment schedule calculated on the initial principal balance at plan enrollment. Even if household income increases substantially, monthly payments cannot exceed this statutory ceiling.

3. Tiered Standard Amortization Tiers

Consolidation loan standard repayment schedules scale across balance thresholds pursuant to 34 CFR 685.208:

Important Statutory Warning: Refinancing federal student loans permanently eliminates federal protections, including income-driven repayment (IDR), Public Service Loan Forgiveness (PSLF), federal interest subsidies, mandatory deferment, and forbearance options.
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