So here is the scenario. You go into repayment in July. You are going back to school in late August. Because it can take up to a month for your enrollment to be updated you will owe payments for July, August, and September. You can’t afford these payments but can afford a payment on an Income Plan. Should you do this plan or a forbearance?
Honestly one of the first questions I ask someone when they ask about an income plan is if they are going back to school. The reason is an interest subsidy. When you are at least a half-time student at a DOE approved school the government pays your interest of subsidized loans. When you are on a PAYE or IBR plan the same subsidy occurs for the first three years.
The important thing to note though is that this 3 years does not stop just because you are back in school. So if you start a PAYE plan in July, 2014 then go back to school in August, your interest subsidy ends in July 2017 regardless of other factors.
This may cause you to waste a subsidy as opposed to if you began it say after you are out of school altogether. However if you are going to school for only a semester this may not matter to you. It is just one thing you must consider when deciding what to do during that bridge period between repayment and returning to school.