Income Based Repayment (IBR)
Income-Based Repayment (IBR) is the most widely available income-driven repayment (IDR) plan for federal student loans that has been available since 2009. Income-driven repayment plans can help borrowers keep their loan payments affordable with payment caps based on their income and family size. IBR will also forgive remaining debt, if any, after 25 years of qualifying payments.
Find out if you qualify for IBR by calling us at 1-800-940-8911 or filling out the form below
Who can use IBR? IBR is available to federal student loan borrowers with either Direct or FFEL loans, and covers most types of federal loans made to students, but not those made to parents (click here for more about qualifying loans). To enter IBR, you have to have enough debt relative to your income to qualify for a reduced payment. That means it would take more than 15% of whatever you earn above 150% of poverty level to pay off your loans on a standard 10-year payment plan. Please see the Department of Education’s Repayment Estimator to see if you’re likely to be eligible.
How does IBR make payments more affordable? IBR uses a kind of sliding scale to determine how much you can afford to pay on your federal loans. If you earn below 150% of the poverty level for your family size, your required loan payment will be $0. If you earn more, your loan payment will be capped at 15% of whatever you earn above that amount.
150% of the Federal Poverty Level for 2015
|PERSONS IN FAMILY OR HOUSEHOLD||48 CONTIGUOUS|
STATES AND D.C.
|FOR EACH ADDITIONAL PERSON, ADD:||$6,240||$7,800||$7,170|
The chart below shows examples of IBR payment caps as a percentage of the borrower’s total family income, based on various incomes and family sizes.
Payment Caps Under IBR, as % of Total Family Income
|FAMILY INCOME (2015)|
|2||NO PAYMENT REQUIRED||6.0%||9.0%||11.4%|
|4||NO PAYMENT REQUIRED||1.4%||5.9%||9.5%|
|6||NO PAYMENT REQUIRED||NO PAYMENT REQUIRED||2.8%||7.7%|
What about interest? In some situations, your reduced payment under IBR may not cover the interest on your loans. If so, the government will pay that interest on your Subsidized Stafford Loans for your first three years in IBR. After three years and for other loan types, the interest will be added to the total amount you owe. While your debt may grow if your affordable payments are low enough, anything you still owe after 25 years of qualifying payments will be forgiven.
What are qualifying payments? The Department of Education has indicated that the following types of payments will count towards IBR’s 25-year forgiveness period, as long as you are in IBR at some point during those 25 years.
- Payments made in the Income Contingent Repayment plan (ICR) beforeJuly 1, 2009.
- All payments made on or after July 1, 2009 in the IBR, Income Contingent Repayment (ICR), and Standard (10-year) Repayment plans.
- Periods when the borrower has a calculated payment of zero in IBR or ICR (this occurs when your income is at or below 150% of the poverty level for your family size).
- Periods on or after July 1, 2009, when the borrower has been granted aneconomic hardship deferment.