Debt Management Tips
Income Based Repayment - "Pay As You Earn" Repayment Plan
If your federal student loan debt is high relative to your income and family size, you may qualify for Income Based Repayment (IBR). At present, the IBR plan caps monthly federal student loan payments at 15 percent of the borrower's discretionary income and grants forgiveness for any remaining loan debt once the borrower makes qualifying payments for 25 years. Modifications made by the United States Congress are projected to reduce the cap from 15 percent to 10 percent of a borrower's discretionary income and to reduce the years of qualifying payments from 25 to 20 years for borrowers who take out their first federal student loan after 2014. The "Pay As You Earn" plan is expected to expedite these modifications making them available to new borrowers as early as 2012. For more information on IBR visit http://studentaid.ed.gov.