Income-Based Repayment
What is Income-Based Repayment?
Income-Based Repayment (IBR) is an alternative student loan repayment plan.
Unlike other repayment plans, which may require a one-size-fits-all payment
amount, IBR establishes a monthly payment that takes your unique situation into
account by considering your income, family size, and federal student loan debt.
What kinds of loans are eligible for IBR?
IBR is only available for federal student loans -- the Stafford, Grad PLUS,
and certain Consolidation loans. It is NOT available for Parent PLUS loans or
for Consolidation loans that include Parent PLUS loans. This repayment option is
also not available for non-federal student loans or loans that are in default.
Who is eligible for IBR?
You may enter IBR if your federal student loan debt is high relative to your
income and family size. While your lender will perform the calculation to
determine your eligibility, you can use the Department of Education's
IBR calculator to estimate whether you would benefit from the IBR plan.
How long is the repayment term for loans under the IBR plan?
Loans paid under the IBR plan have a maximum 25-year repayment term. Any
outstanding principal and interest still owed after 25 years of qualifying
payments will be forgiven.
The following chart shows the maximum IBR monthly payment amounts for
2009 for a sample range of incomes and family sizes.
| IBR Monthly
Payment Amount |
Annual
Income |
Family 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 |
After the initial determination of your eligibility for IBR, your payment
may be adjusted each year based on your income and family size, but your
required payment will never be more than the standard 10-year payment amount
(unless you choose to exit the IBR program).
What are the benefits of IBR?
-
Pay As You Earn: Under IBR, your monthly payment amount
will be less than the amount you would be required to pay under a 10-year
standard repayment plan and may be less than under other repayment plans.
Although lower monthly payments may be of great benefit to a borrower, these
lower repayments may result in a longer repayment period and additional
interest.
-
Interest Payment Benefit: If your monthly IBR payment does
not cover the monthly interest that accrues on the loans, the government
will pay your unpaid interest on Subsidized Stafford loans (either Direct
Loan or FFEL) for up to three consecutive years from when you first enter
IBR repayment. After three years, and for all the other types of loans,
interest that accrues will be capitalized (added to the loan principal on
which future interest is calculated) when the borrower no longer is eligible
for an IBR repayment amount).
-
25-Year Cancellation: If you repay under the IBR plan for
25 years and meet certain other requirements, any remaining balance will be
cancelled.
-
10-Year Public Service Loan Forgiveness: If you work in
public service and have reduced loan payments through IBR, your remaining
balance after 10 years in a public service job could be cancelled if you
made loan payments for each month of those 10 years. The Public
Service Loan Forgiveness Program. However, only the payments made while in
the Direct Loan Program will count toward the required 120-monthly payments.
For more information about this program, review the Department of
Education's
Public Service Loan Forgiveness Program Fact Sheet.
What are the disadvantages of IBR?
-
You May Pay More Interest: The faster you repay your
loans, the less interest you pay. Because a reduced payment in IBR general
extends your repayment period, you may pay more total interest over the life
of the loan.
-
You Must Submit Your Annual Documentation: To set your
payment amount each year, your lender needs updated information about your
income and family size. If you do not provide the documentation, your
payment reverts to the standard 10-year repayment amount.
Forms
Income-Based Repayment Plan Application
Income-Based Repayment Supplemental Information Form
(To be used for claims filed on or after July 1, 2009)
Income-Based Repayment Alternative Documentation of Income
Resources and Tools
IBR Calculator
Provided by the Department of Education, this handy tool helps you determine
whether you would benefit from the IBR plan. It looks at your income, family
size, and state of residence to calculate your IBR monthly payment amount. If
that amount is lower than the monthly payment under a 10-year standard repayment
plan, then you are eligible to repay your loans under IBR.
Mapping
Your Future
Mapping Your Future also has an IBR calculator available for use.
IBRinfo
Need more information? IBRinfo can provide it! It includes a helpful FAQ, a
calculator, and can provide you with helpful updates about the IBR plan.
NCHELP
Have additional questions? Maybe NCHELP's training presentations can help.
Federal Student Aid
Here borrowers can find the IBR calculator provided by the Department of
Education as well as examples of who is and isn't eligible for the IBR plan.
To view all of the repayment options available to you, please click
here.
Stay informed on updates to this page and additional IBR information by
subscribing to E-Updates.