Income-Based Student Loan Repayment Plan
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?