Income-Based Student Loan Repayment Plan

Many college graduates face crushing student loan debt and discover, after they have landed their first out-of-college job, that starting wages don't begin to cover all of their expenses. American students owe over $1 trillion (yes, that's with a T) in student loans.

According to the New York Times:
For all [student] borrowers, the average debt in 2011 was $23,300, with 10 percent owing more than $54,000 and 3 percent more than $100,000, the Federal Reserve Bank of New York reports. Average debt for bachelor degree graduates who took out loans ranges from under $10,000 at elite schools like Princeton and Williams College, which have plenty of wealthy students and enormous endowments, to nearly $50,000 at some private colleges with less affluent students and less financial aid.
Some parents who co-signed student loans, many now totaling over $100,000, have started taking out life insurance policies on their new graduates.

But if you took out federal student loans, there may be some relief.

The Federal Government has a plan that allows college graduates to repay their FEDERAL student loans based on income.

Here's how to qualify for Income Based Repayment (IBR):

ELIGIBLE LOANS - PLUS and Consolidation loans, made under either the Direct Loan or FFEL Program are some of the eligible loans that quality for IBR.

INCOME QUALIFICATION - You may enter IBR if your federal student loan debt is high relative to your income and family size.

There are some huge benefits to the IBR plan:

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.

INTEREST PAYMENT BENEFIT — If your monthly IBR payment amount does not cover the interest that accrues on your loans each month, the government will pay your unpaid accrued interest on your Subsidized Stafford Loans (either Direct Loan or FFEL) for up to three consecutive years from the date you began repaying your loans under IBR.

25-YEAR CANCELLATION — If you repay under the IBR plan for 25 years and meet certain other requirements, any remaining balance will be canceled.

10-YEAR PUBLIC SERVICE LOAN FORGIVENESS — If you work in public service, on-time, full monthly payments you make under IBR (or certain other repayment plans) while employed full-time in a public service job will count toward the 120 monthly payments that are required to receive loan forgiveness through the Public Service Loan Forgiveness Program.

Click here to learn more about the Federal IBR Plan.

Have you taken out student loans? If so, do you have a plan to pay them back?


  1. Student loans are horrible, I remember saying that I wasn't going to take out any student loans because I didn't want to be an any kind of debt when I got out of college. Unfortunately, I had no choice but to take out a loan. The picture scares me because right now I'm fine no worries about paying, but I know that when I graduate I will have to worry about my debts. However, at the same time I'm not too worried about it because I know I can worry about that later. There's two choices, go to college or not go to college. I'm going to continue being in college, so the loan is something that I haven to do. I'm just glad there are ways to help students who graduate from college pay their debt.

  2. Well I haven't taken any college loans yet as my financial situatuion is very good. But now I have to start considering it, as my father is facing some problems with his business. though im not worried that much but the fact it could affect my stuidies I have to take it seriously. However, when I graduate I would pay my loan back depending on my fathers situation or if I get decent job. The only cause of my worry is the recession we have been going through and that could be hurdle for paying my debts back.

  3. I personally haven't taken out any loans, but my brother who goes to UC Santa Barbara, has taken out several student loans. At the moment, he doesn't realize, but once he graduates college he is going to be in a ton of debt from his student loans. We need an easier way to pay these back and I am glad to see that the government is starting to try to do something about it. Another friend of mine just graduated from San Diego State and had a whopping $80,000 in debt. This is outrageous. And it will take forever for her to pay that off because it is really difficult now a days to get a job in our struggling economy. As for me I took the Junior College route and I am going to save myself a ton of money by spending two years at a community college and then going to a private school for two years on a scholarship to play basketball and not have any debt coming out of college. That is the plan so far, hopefully it goes accordingly.

  4. Heard about the income-based repayment plan before but never really learned about it. Thank goodness you have simplified such for your readers—now, it's totally understandable. Student loans are quite hard to pay even after you've graduated. But thanks to this, it would ease the whole process. Have a great day ahead. :)


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