Income Based Repayment Program

 Starting July 1, 2009 a new repayment option is available that makes monthly payments more affordable for Americans with heavy federal student loan burdens. The Income-Based Repayment (IBR) plan protects borrowers by linking payments to income and family size. A related program offers additional benefits to those working in public service jobs.

 

Advantages of the IBR Program

  • Affordable payment (including $0)
  • The government will pay the unpaid interest on subsidized loans for up to three consecutive years if the monthly IBR payment does not cover the monthly accrued interest
  • Any remaining principal and interest will be cancelled after 25 years of repayment
  • IBR payments count for Public Service Loan Forgiveness

Disadvantages of IBR : 

  • More interest paid over the life of the loan
  • To continue reduced payments under IBR, a borrower must submit updated information on income and family size each year

 

  Federal Resources

  • NEW EEFECTIVE JULY 1, 2010;

    Married Borrowers: When married couples both have federal student loans, they will no longer face higher IBR payments than their unmarried peers. For married borrowers who file their taxes jointly, lenders will factor in the couple's total federal student loan debt, as well as their total income, to calculate payments.  Originally, IBR did not recognize that joint income has to cover both spouses' federal loan payments, resulting in payment requirements up to twice what two equivalent single people would have to pay. 

    Baseline Debt: IBR eligibility will be based on either the balance when the loan first entered repayment or  the current loan amount, whichever is greater.  This will allow borrowers whose loan balances have increased (often due to accrued interest during periods of deferment or forbearance) to qualify based on what they actually owe. (Note: This change only affects IBR eligibility, not payment amounts - your IBR payment amount is based on your income.)

IBRinfo was created by the nonprofit, nonpartisan Project on Student Debt to help student loan borrowers learn about two new federal loan programs: Income-Based Repayment (IBR) and Public Service Loan Forgiveness.

 

 

 

The mission of Equal Justice Works is to create a just society by mobilizing the next generation of lawyers committed to equal justice. Their website contains links to a webinar series  and podcasts on this programs

 

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Updated February 13, 2012