Final answer:
The loan repayment plan based on annual income is called an Income-Driven Repayment Plan. These plans adjust the monthly loan payments based on the borrower's income and family size and offer loan forgiveness after a certain period of time.
Step-by-step explanation:
The loan repayment plan that is based on annual income is called an Income-Driven Repayment Plan. This type of plan adjusts the monthly loan payments based on the borrower's income and family size. There are several types of income-driven repayment plans, such as Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE). For example, under an income-driven repayment plan, if a borrower's annual income is low, the monthly loan payments will be lower, and if the annual income increases, the monthly payments will also increase. These plans also offer loan forgiveness after a certain period of time, typically 20-25 years.
It is important to note that eligibility for income-driven repayment plans may vary depending on the type of loan and the borrower's financial situation. Borrowers can contact their loan servicer or visit the official website of the loan program to find out more information and apply for an income-driven repayment plan.