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.

• NEW: President Obama's October 26, 2011 announcement -"Help Americans Manage Student Loan Debt"

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

• Fact Sheet (including calculator) from the U.S. Department of Education
• Frequently Asked Questions (12/31/2009)
• 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

Other Webinars and Fact Sheets

• Frequently Asked Questions about the Public Service Loan Forgiveness Program from the National Association of Student Financial Aid Administrators("NASFAA")
• Intro to the Income Based Repayment Program  - 2/20/2009 webinar
• Follow-up answers to questions raised during the webinar
• Intro for Schools to Income Based Repayment Program - 4/09/2009 webinar

In the News

• On March 21, 2010, the U.S. House of Representatives passed the Reconciliation Act of 2010 (H.R. 4872) by a vote of 220-211. This bill makes major changes in several federal student aid programs and now heads to the Senate where further action is expected this week.
  • Beginning July 1, 2014, new borrowers  will qualify for IBR IF the borrower's standard repayment exceeds 10% of discretionary income (reduced from the current 15%)  AND the income based repayment amount is lowered to 10% of the borrower's discretionary income. (Discretionary income is the amount of the borrower's Adjusted Gross Income ("AGI") that exceeds 150% of the poverty line for the borrower's family size.) Loan forgiveness occurs after 20 years of repayment rather than the current 25.

Updated October 26, 2011