Income Based Repayment Plan (IBR) – What is it?

The Income Based Repayment Plan is designed to put a cap on your required monthly payments on the many types of federal student loans at an amount intended to be affordable based on income and family size.

The program lowers monthly payments for borrowers who have high loan debt with lower incomes.  Like any loan government student loan program there are certian things could change over time.

• The length of the loan repayment period could increase

• Accrue more interest on the loan

• As you income increases the amount you pay on your student loans could increases as well.

What Loans Qualify?

According to the Government Federal Student Aid Website the following loans qualify for IBR.

Direct Subsidized Loans

• Direct Unsubsidized Loans

• Direct PLUS Loans made to graduate or professional students

• Direct Consolidaton Loans without underlying PLUS loans made to parents

• Subsidized Federal Stafford Loans

• Unsubsidized Federal Stafford Loans

• FFEL PLUS Loans made to graduate or professional students

• FFEL Consolidation Loans without underlying PLUS loans made to parents

 Who Qualifies?

Anyone can check to see if they qualify.  The best thing to do is to call your student loan servicer and ask for the paper work for the IBR.

Items your loan servicer will need

• a copy of your most recently filed tax return

• a Repayment Plan Selection form or an Income-Based Repayment Request form

• an Alternative Documentation form IF you have no taxable income or you’ve experienced a significant change in your income since your most recently filed tax return.

Criteria used to determine eligibility for the Income Based Repayment Plan is:

• Federal Student loan balance

• Adjusted gross income (AGI) from you current tax return

• Federal tax filing status

• Family Size

• State of residence

Once your servicer has all the information they will use a basic formula to determine if you qualify.  If you want to see if you might qualify, you can use an IBR calculator.

Your Monthly Payment

According to the Government Federal Student Aid website, monthly payments are based on your

• your income and family size;

• adjusted each year, based on changes to your annual income and family size;

• usually lower than they are under other plans;

• never more than the 10-year standard repayment amount; and

• made over a period of 25 years.

To find out more on the Income Based Repayment Plan go to the Government Federal Student Aid website.