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Federal Student Loans – Income-Based Repayment (IBR)
1 CommentPlease visit Paying Student Loans – Student Loans Debt for up to date news and information on obtaining and paying student loans.
The income-based repayment plan came as part of the College Cost Reduction and Affordability Act of 2007 and went into effect on July 1, 2009.
This plan was established to help struggling college graduates by lowering their monthly payment to less than 10% of their income and forgiving any remaining debt after 25 years.
In addition, the plan offers forgiveness of balances after 10 years through the Public Service Debt Forgiveness Program. With this program you must maintain a public service job for 10 years. These service jobs include being a teacher, social worker, or governmental worker. After making 120 on time monthly payments, your remaining debt will be eliminated.
The federal government calculates your monthly payment based on your family size, state of residency, and income. The chart below shows what your maximum monthly payment would be under the new program. Note: If your annual income is under $20,000 per year, your monthly payment would be $0.
IBR Monthly Payment Amount
Annual
IncomeFamily 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
Check out the Federal Student Aid calculator IBR Calculator to find out how much you could save by participating in the IBR program.
There are some limitations to this plan:
-You must have federal loans such a Stafford, grad plus or a consolidated loan made under the direct loan or FFEL
-Loan balance must be at least $30,000
-You must prove your income annually in order to remain eligible
-You can not miss any payments with the Public Service Debt Forgiveness program
- You could lose loan forgiveness if you are more then 360 days late on a payment with the 25 year plan
For more information on the program visit http://studentaid.ed.gov
Published on July 27, 2009 · Filed under: Paying Student Loans – Student Loans Debt;
One Response to “Federal Student Loans – Income-Based Repayment (IBR)”
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Paying Student Loans – Student Loans Debt – Healthy Financial Habits said on July 27th, 2009 at 11:33 am
[...] UPDATE: JULY 27 – The federal government released a new plan on July 1, 2009 aimed to make payments affordable for college graduated. For details visit: Federal Student Loans – Income-Based Repayment [...]