Income-Based Repayment (IBR)

Having thousands of dollars of student loan debt and a massive monthly payment can be a huge burden especially on a recent graduate starting salary. IBR is a type of program that sets your monthly payment amount based on your current income levels. Those with high student loan balances and unaffordable monthly payments compared to their yearly income can really see drastic changes in just how much their monthly obligation is and provide much-needed relief.

4 Types of Income-Driven Repayments

IBR (income-based repayment) often gets lumped in as a general term for various Income-Driven Repayment programs or IDR plans. There are four different IDR plans offered by the Department of Education and Income-Based Repayment is one of the most widely used of the bunch. Here we briefly explain each and go more in-depth into IBR plans as they are what most people with student loan debt will qualify for.

Income-Based Repayment (IBR)

The most popular of the programs, in-depth explanation in the following section.

Income-Contingent Repayment (ICR)

This is solely for those with Parent PLUS Student Loans. With this program, you have to consolidate your Parent PLUS loans and your monthly payments will be capped at 20% of your discretionary income. Borrowers who qualify will get a term up to 25 years.

Pay As You Earn (PAYE)

This program is for graduates who took out loans prior to October 2007 and again after October 2011. If you have direct loans through the federal government that meets these requirements this program helps cap monthly student debt obligations at 10% of income. The new monthly payment must not exceed your Standard 10 Year plan and has a 20-year forgiveness term where any debt left over after the term is forgiven.

Revised Pay As You Earn (REPAYE)

This is pretty much the same as Pay As You Earn but is for those that don’t meet the requirements of the above plan. Same as PAYE, monthly payments are capped at 10% of discretionary income, but plans are usually 25-year terms.

What is IBR?

IBR is similar to other IDR programs in that it can assists graduates and those with high monthly student debt obligations get into a more affordable payment plan under the Standard Repayment Plan based on their current income levels.

IDR plans lower monthly payments

Obviously, when you have high student debt balances, your monthly obligations to those loans are going to be high as well. Even under the Standard Repayment Plan of 10 years, your monthly payments can be extremely unaffordable compared to the money you bring in every month. With lower-income even payments that seem more affordable become burdensome on individual and family financial situations.

This is where IDR plans are best utilized. Instead of monthly payments being set based on your overall debt owed, they are tied to your income level. These plans were implemented to make payments affordable based on income as well as family size (both factors that are weighed when qualifying for the program).

Qualifying for Income-Based Repayment Plans

Borrowers that have student loans after 2014 can receive forgiveness under these plans after 20 years and the Income-Based Repayment allows your monthly loan amount to be capped at 10%. While anything prior to 2014 is set at 25 years and 15%.

Essentially if you have payments currently under the Standard Repayment plan and getting into an IBR based program would make them higher, you don’t qualify. IBR is intended to lower monthly obligations and get people out of unaffordable Standard Repayment Plans.

The following Federal Loans qualify for IBR plans:

• Direct Subsidized and Unsubsidized Loans
• Direct Graduate PLUS loans
• FFEL Consolidation Loans
• Direct Consolidation Loans

Eligibility

If you think you qualify for any of these you should call us and speak with one of our student loan professionals! Our experts have extensive knowledge in all type of Income-Driven Repayment programs and can advise you on the best course of action for your specific situation. You aren’t stuck with unaffordable student debt payments forever, relief is just a phone call away!

Check My Eligibility!