The PAYE interest cap is essentially never better than the REPAYE interest subsidy. There are reasons PAYE can be a better choice for many borrowers, but the interest capitalization cap isn’t really one of them.
But let’s take a step back: If you’re reading this post, you may already know the relevant facets of income-driven repayment plans that I’m referring to: Within the PAYE plan, any accrued interest that capitalizes is limited to 10% of the original principal amount when you enter repayment. What this means is that no matter how much interest accrues, the maximum principal amount after capitalization in the long-term is the original amount + 10%. Which means that over the long term, the rate of interest accrual is capped (but not the amount, of course). When does interest capitalize within the PAYE program? When you lose your partial financial hardship, which will likely happen at some point during attendinghood depending on how much you owe vs. how much you make. An example would be if you had a $200k loan with $50k in accrued interested; after capitalization in PAYE, the loan would be $220k with $30k in accrued interest instead of $250k, which means at 6.8% $14,960 accrues per year instead of $17,000.
In contrast, REPAYE has a subsidy that pays half of the unpaid accrued interest on a monthly basis. The reason the above question is basically never is because REPAYE interest never capitalizes unless you leave the plan. Because there is no hardship requirement, your interest will continue to accrue at the same rate it always has. Only if you try to change back to a different repayment plan (say, to lower payments as a high-earning attending) would your interest capitalize. That $200k loan in REPAYE will always accrue the same amount of interest every year (until you begin to pay down the principal, of course).
