Income Based Repayment

One very reasonable concern applicants have is paying off student loans that are borrowed to help pay for educational expenses.  I am happy to say that the U.S. Government does provide a program aimed at helping individuals with Federal loans manage debt accumulated while in school.

Below you will find a few bits of information concerning the Income Based Repayment Plan (IBR) offered by the government.  Through the program your required monthly payment is capped at an amount that is intended to be affordable based on your income and family size.  And for those interested in pursuing public service jobs, there is loan forgiveness option after 10 years of service.

Those interested in IBR plans will have to submit information to the government to determine eligibility and to set up payment plan specifics.  The information below is a great start, but to get more information on the details of the program, please visit this page set up by the government, and here is an link to an FAQ as well.

What is Income Based Repayment?

Income Based Repayment (IBR) is a new repayment plan for the major types of federal loans made to students. Under IBR, your required monthly payment is capped at an amount that is intended to be affordable based on your income and family size.

What federal student loans are eligible to be repaid under an IBR plan?

Any Stafford, Grad PLUS or Consolidation loan made under either the Direct Loan or FFEL program is eligible for repayment under IBR, EXCEPT loans that are currently in default, parent PLUS Loans, or consolidation loans that repaid a parent PLUS Loan. The loans can be new or old, and for any type of education (undergraduate, graduate, professional, job training).

Who is eligible for IBR?

You may enter IBR if your federal student loan debt is high relative to your income and family size. While your lender will perform the calculation to determine your eligibility, you can use the Departments IBR calculator to estimate if you would likely benefit from the IBR plan. It looks at your income, family size, and state of residence to calculate your IBR monthly payment amount. If that amount is lower than the monthly payment under a 10-year standard repayment plan, then you are eligible to repay your loans under IBR. See below for a more detailed description of how IBR eligibility is determined.

The following chart shows the maximum IBR monthly payment amounts for 2009 for a sample range of incomes and family sizes.

IBR Monthly Payment Amount

Annual
Income

Family Size

1 2 3 4 5 6 7
$10,000 $0 $0 $0 $0 $0 $0 $0
$15,000 $0 $0 $0 $0 $0 $0 $0
$20,000 $47 $0 $0 $0 $0 $0 $0
$25,000 $109 $39 $0 $0 $0 $0 $0
$30,000 $172 $102 $32 $0 $0 $0 $0
$35,000 $234 $164 $94 $24 $0 $0 $0
$40,000 $297 $227 $157 $87 $16 $0 $0
$45,000 $359 $289 $219 $149 $79 $9 $0
$50,000 $422 $352 $282 $212 $141 $71 $1
$55,000 $484 $414 $344 $274 $204 $134 $64
$60,000 $547 $477 $407 $337 $266 $196 $126
$65,000 $609 $539 $469 $399 $329 $259 $189
$70,000 $672 $602 $532 $462 $391 $321 $251