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What is an Income Based Repayment (IBR) Plan for My Federal Student Loan?

Income Based Reypayment (or IBR) is just that: a federal government plan for repayment of their loans based on the borrower's income.  However, you must have a partial financial hardship to qualify. In essence, that your monthly loan payment exceeds 15% of your monthly disposable income (10% if you started borrowing after July 1, 2014).

Overall, IBR is designed to cap your required monthly payment at an amount that is affordable based on your adjusted gross income (AGI) and family size. To continue to participate, every year you must provide the U. S. Department of Education with information about your current income and family size.  Your monthly payment is then determined for the next 12 months.

Even better, after 25 years of qualifying repayment, any remaining loan balance will be forgiven! You may have to pay taxes on the amount forgiven, but the law may change by the time your payment plan ends.

Does My Loan Qualify for IBR?

But not all loans can have IBR.  Loans that do qualify include:

  • Stafford
  • Graduate PLUS
  • Perkins Loans (as long as they are consolidated into your other loans)

The IBR Plan is NOT available, however, for repayment of Parent PLUS loans under the Direct Loan (DL) or Federal Family Education Loan (FFEL) Program.

In addition, IBR is not available where there has been a loan consolidation, and that consolidation includes a Direct or FFEL Parent PLUS loan.  So IBR is for the students, not the parents.

So What Do I Do?

If you live in southern New Jersey and would like to consult with me on your loans and get a better repayment plan, please feel free to call my office at 856-432-4113 or contact me through this site to schedule an appointment in my Woodbury office to discuss your case.

If you would like more information about student loans, you can dowload my free book, I Graduated; Now What? A Guide to Dealing with Your Student Loans.

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Steven J. Richardson
Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.