IBR 101: An Introduction to Income-Based Repayment for Student Loans
IBR is one of the newest student loan repayment programs. In college students may take out student loans that are larger than they can handle. However, there is no requirement that students start repaying student loans until after graduation. This can mean that the payments really pile up. Once a student graduates, the payments may take all of their initial career earnings.
This can be a huge problem and keep people under the poverty line. Children in these families may go without. It can also destroy relationships and marriages. People may never be able to rise above this debt because they are spread too thin.
To deal with this issue, the federal government developed IBR. The abbreviation IBR means income based repayment. This means that the government uses your income and the size of your family to determine how much you must pay each month on your student loans. This adjustment system is designed to help borrowers care for their families.
IBR can help a lot of people handle their student loan debt. The programs provides repayment options that are feasible. There are some other very attractive aspects to IBR. For example, you might remain in the program for 25 years. At the end of this time any remaining debt can be cancelled or forgiven.
It should not surprise you that there is some paperwork involved in IBR. They program requires a yearly evaluation of your income based on the past year’s earnings. Your family size might also change. However, your payments will never exceed 15 percent of the amount over the poverty level that you make. Of course at some time you may be below the poverty level for your family size. If this happens you pay nothing. This will help keep your debt under control.
Lots of people are interested in participating in IBR. They have concerns that they cannot participate because they are in other programs. Many programs will credit past work on your debt toward your IBR work. This way you do not lose ground by switching over to the new payment program. You can also still work toward student loan forgiveness. Participating in IBR does not make you ineligible for forgiveness based on public service.
