Income-Based Repayment Plan for Federal Direct and FFEL Student Loans

income based repayment plan

Income-Based Repayment Plan Overview

The Income-Based Repayment Plan (IBR) is for borrowers who have a large amount of student loan debt compared to their income. This plan can reduce your payments to make your debt more manageable.  Eligiblilty for Income-Baed Repayment In order to qualify for IBR, you must be able to demonstrate a partial financial hardship.

A partial financial hardship occurs when the monthly amount you would be required to pay on your IBR-eligible federal student loans under Standard Repayment is higher than the monthly amount you would be required to repay under IBR. Your payment amount is based on your income and family size and may increase or decrease based on those variables.

After you initially qualify for IBR, you may continue to use the plan even if you no longer have a partial hardship at a later date.  

Eligible Federal Loans

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS Loans for Graduate/Professional Students
  • Direct Consolidation Loans (except those that include Parent PLUS)
  • FFEL Stafford Loans
  • FFEL PLUS Loans for Graduate/Professional Students
  • FFEL Consolidation Loans (except those that include Parent PLUS)

FFEL loans were discontinued on July 1, 2010.  Monthly Payments Your monthly payment under IBR will be based on your income and family size. Your payment will never be greater than the payment you would have under the Standard Repayment Plan. You will have up to 25 years to repay your loan. In order to remain under this repayment plan, you will need to provide updated family size and income information to your loan servicer each year.

If you do not provide this update, you will be moved under the Standard Repayment Paln.  Benefits of Income-Based Repayment There are several advantages to borrowers repaying under the Income-Based Repayment Plan. They include:

  • Payments based on earnings. Your payment is based on what you earn. Your payment will be less than what your would pay under the Standard Repayment Plan
  • Interest payment benefit. If you monthly IBR payment doesn’t cover the accrued interest on your loans each month, the government will pay your unpaid interest on Direct or FFEL Subsidized loans for up to three years from when you entered repayment under IBR
  • 25-year cancellation. If repay your loan for 25 years under IBR and meet certain other conditions and still have a remaining balance, that balance will be cancelled.
  • Public Service Loan Forgiveness. IF you make on-time, full monthly payments whill working full-time in a public service job, the payments you make will be counted toward the 120 monthly payments required under the Public Service Loan Forgiveness Program. The Public Service Loan Forgiveness Program only applies to Direct Loans. If you consolidate your FFEL loans under the Direct Loan Program, you may be able to take advantage of the Public Service Loan Forgiveness Program. For more information see the Department of Education’s page at: Public Service Student Loan Forgiveness

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