Assistance With Student Loan Repayment
One of the most common financial challenges that people face is student loan debt. If you’re experiencing high monthly payments, then Income-Based Repayment (IBR) might be able to help. IBR is designed to lower your monthly payment on your federal student loans by adjusting them based on your income, family size, and total amount owed on your loan(s). After making payments for 25 years (20 if you began repayment before July 1st 2014), any remaining balance will be forgiven. It’s important to note that forgiveness isn’t automatic; it depends on whether you’ve made all required payments each month over those 20 or 25 years.
The United States Department of Education has a number of programs to help you get out from under student loan debt.
The United States Department of Education has a number of programs to help you get out from under student loan debt. One significant program is Income-Driven Repayment (IDR), which allows borrowers to make payments based on their income and family size, as well as any other outstanding federal debt.
This means that people with lower incomes can pay less than they would otherwise owe each month, while those who earn more can pay more. To take advantage of this program, you must have outstanding loans through the William D. Ford Federal Direct Loan Program (FDLP) or Perkins Loans. You may also be eligible if you have an FFELP loan and are having trouble making payments due to severe financial hardship, or if your FFELP loan entered into repayment prior to July 1st 2009 but was later transferred into FDLP status via consolidation or transfer servicing agreements.* There are several other types of assistance programs available through your student loan servicer as well; these include:
- Student Loan Forgiveness Programs – These programs forgive part or all of your remaining balance after 10 years during which time you’ve made 120 consecutive monthly payments on time (or another qualifying repayment period).
One such program is Income-Based Repayment (IBR).
Income-Based Repayment (IBR) is a repayment plan that caps your monthly payments at 15% of your discretionary income and adjusts them annually based on changes in your family size. Because IBR can lower your monthly payment to as low as $0, it’s a great option if you have high debt and need some extra help making ends meet each month. But keep in mind that this program does not extend the length of your loan term; instead, it lowers monthly payments so that they fit into an affordable budget and helps prevent defaulting on student loans by allowing borrowers to focus more energy on repaying their debt rather than struggling financially.
IBR is designed to ease the burden of high monthly payments by adjusting your repayment plan to an amount based on your income, family size, and the total amount owed on your loan.
In IBR, the government pays your interest on subsidized loans for an extended period of time. This is a good option if you have a high debt-to-income ratio because it makes your monthly payments more manageable. If you’re considering IBR, it’s best to work closely with a student loan counselor who can help guide you through the process.
Once approved for IBR, payments are based on 20% of discretionary income and go toward both principal and interest; however, they do not cover all of the accrued interest during this time because only part of the principal balance is being paid off each month. If at some point in time during repayment your income exceeds 250% FPL (Federal Poverty Line), then additional payments will be required by federal law that cannot exceed 15% of discretionary income per year until remaining balances are repaid in full
After making payments for 25 years, the remaining balance will be forgiven.
When you repay your student loans under the Income-Based Repayment (IBR) program, you’ll pay 10% of your discretionary income. If you’re married and file taxes jointly with your spouse, they won’t have to pay more than 20% of their discretionary income.
- Your lender will determine how much of your monthly payment goes toward principal and how much goes toward interest each month.
- As a result, when the repayment term ends (25 years), any remaining balance will be forgiven—this is called an “unforgiven” amount or subsidy amount. This means that if you plan on going into public service after graduation and want to receive forgiveness at that time, it may make sense for you not to consolidate into one loan right now so that when it’s time for forgiveness in 2040 or later—your lender will apply only what was originally borrowed rather than all accrued interest payments since then!
See if you qualify for IBR!
If you have Direct Loans and meet the above requirements, you may qualify for IBR. To see if your loan servicer offers this repayment plan, check out their website or call them directly.
If you are eligible for IBR, your payments will be calculated as follows:
- The interest that accrues (compounds) each month will be capitalized for 30 years on undergraduate loans only.
- Your monthly payment will be capped at 20% of your disposable income—and even less if required annual taxes and/or insurance premiums come out of wages first.
If you think that IBR could be a good option for you, we recommend looking into it as soon as possible. The sooner you enroll in an income-driven repayment plan, the more money you will save over time. The program can also make life easier by adjusting your payment amount based on your income and family size. With so many Americans struggling to repay their student loans, this is one of the best ways to get out from under this burden once and for all!