Income Based Reypayment (or IBR) is a federal government plan for repayment of their student 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.
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.
But not all loans can have IBR. Loans that do qualify are:
- Graduate PLUS
- Perkins Loans (as long as they are consolidated into your other loans)
In essence, IBR is for student borrowers. Parents who take out Parent PLUS loans cannot participate. But there are other programs for them, more specifically Income Contingent Repayment (ICR).
If you live in New Jersey and are struggling with payment on federal student loan debt, I may be able to be of assistance. Just download this questionnaire, fill it out, and then fax it to me at 856-686-9911 or e-mail it to me. I will then review it and contact you to discuss options and possible representation.