Options to Reduce Federal Loan Payments - Income Based Tab

Income Based Repayment Plan (IBR)

Income Based Repayment is a way to make your federal student loan payments more manageable. Under the IBR plan, your monthly payment amount will be calculated based on your discretionary income; the difference between your annual income and 150 percent of the poverty guideline for your family size and state of residence. To qualify, the payment you would be requred to make under the IBR plan must be less than what you pay under the Standard Repayment Plan with a 10-year repayment period.

Your monthly payment will be based on 10 percent of your discretionary income if you're a new borrower on or after July 1, 2014. You are considered a new borrower if you had no outstanding balance on a William D. Ford Federal Direct Loan (Direct Loan) Program loan or Federal Family Education Loan (FFEL) Program loan when you received a Direct Loan on or after July 1, 2014. For new borrowers, any remaining debt will be forgiven after 20 years of on-time IBR payments.

Your monthly payment will be based on 15 percent of your discretionary income if your're not a new borrower on or after July 1, 2014. For borrowers under this version of the IBR plan, their remaining debt will be forgiven after 25 years of on-time IBR payments.

All Stafford, PLUS, and Consolidation Loans made under either the Direct Loan or FFEL Program are eligible for repayment under IBR, except loans that are currently in default, parent PLUS Loans, or Consolidation Loans that repaid parent PLUS Loans. The loans can be new or old, and for any type of education (undergraduate, graduate, professional, job training).

You may enter IBR if your federal student loan debt is high relative to your income and family size. While your loan servicer will perform the calculation to determine your eligibility, you can use the U.S. Department of Education’s Federal Student Loan Simulator to estimate whether you would likely qualify for the IBR plan.