The ANSON BIZ-ZINE
WADESBORO, ANSON COUNTY, NORTH CAROLINA, U.S.A.

Income Based Repayment Plans for Student Loans
August 4, 2009

     Income Based Repayment (IBR) is a new repayment plan for the major types of federal loans made to students. Under IBR, your required monthly payment is capped at an amount that is intended to be affordable based on your income and family size.
     Any Stafford, Grad PLUS or Consolidation loan made under either the Direct Loan or FFEL program is eligible for repayment under IBR, EXCEPT loans that are currently in default, parent PLUS Loans, or consolidation loans that repaid a parent PLUS Loan. The loans can be new or old, and for any type of education (undergraduate, graduate, professional, job training).
     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 Departments IBR calculator to estimate if you would likely 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.
     The following chart shows the maximum IBR monthly payment amounts for 2009 for a sample range of incomes and family sizes.

Annual IncomeFamily Size

$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
$55,000
$60,000
$65,000
$70,000 		1
$0
$0
$47
$109
$172
$234
$297
$359
$422
$484
$547
$609
$672 		2
$0
$0
$0
$39
$102
$164
$227
$289
$352
$414
$477
$539
$602 		3
$0
$0
$0
$0
$32
$94
$157
$219
$282
$344
$407
$469
$532 		4
$0
$0
$0
$0
$0
$24
$87
$149
$212
$274
$337
$399
$462 		5
$0
$0
$0
$0
$0
$0
$16
$79
$141
$204
$266
$329
$391 		6
$0
$0
$0
$0
$0
$0
$0
$9
$71
$134
$196
$259
$321 		7
$0
$0
$0
$0
$0
$0
$0
$0
$1
$64
$126
$189
$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).
     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 payments may result in a longer repayment period and additional interest.
     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.)
     If you repay under the IBR plan for 25 years and meet certain other requirements, any remaining balance will be cancelled. If you work in public service and have reduced loan payments through IBR, your remaining balance after ten years in a public service job could be cancelled if you made loan payments for each month of those ten years.
     The Public Service Loan Forgiveness Program is available only if you have Direct Loans and you make 120 monthly payments under the Direct Loan Program. If you have FFEL loans, you may be eligible to consolidate them into the Direct Loan Program to take advantage of 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, go to a href="http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRPlan.jsp#content"> http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRPlan.jsp#content
     You can also review the Department’s Public Service Loan Forgiveness Program Fact Sheet through links at that site.

Janine Rywak
County Extension Director

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