Income Based Repayment (IBR) was enacted on July 1, 2009 as part of the College Cost Reduction Act. If you are a borrower experiencing financial hardship, have low income in comparison to your debt, or pursuing a career in public service IBR may benefit you.
IBR is designed to make repaying the cost of your education easier for those pursuing careers with lower paying fields, such as public service. IBR caps the monthly payments based on the borrowers income and family size. Your monthly payments may change annually based on changes in family size or income.
- Single borrowers must have an income of less than $50,000.
- Married borrowers with two children must make less than $100,000.
Most monthly payments under IBR is less than 10% of the gross income.
Income Based Repayment can be used on:
- Stafford Loans
- Grad PLUS loans
- Consolidation Loans
- Federal Student Loans only!!
Sorry, Parent PLUS loans and Perkins Loans are not eligible.
Pay as you earn money, your monthly payment will be less than the amount the Federal Government would require you to pay under the regular ten year plan.Interest- In the event your IBR payment will not cover the interest that accrues monthly on your loans, the government will pick up the interest for Subsidized Stafford Loans.
25 Year Cancellation- If you meet all requirements and pay for 25 years, any remaining money you owe will be cancelled.
The Downfalls of IBR:
More Interest- the longer it takes you to repay your loans, the more interest will accrue. The quicker you pay off loans, the less interest you pay.
Documentation- In order to determine your payments, you will have to provide yearly documentation of income and family size. If IBR sounds like something that is for you, contact the lender of your student loans!