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Repay Student Loans with the Income-Based Repayment Plan

Receiving a college education may be the single most important accomplishment that one may achieve in their entire life time.

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The nation’s total student loan debt has broken the $1 trillion ceiling, surpassing even the total national credit card debt. Students are graduating from their universities and study programs with tens of thousands of dollars to repay, but they’re unable to find work. Websites are hosting heartbreaking student loan stories, while some debt-ridden youths are equipping themselves with picketing signs and taking to the streets.

Our country has never seen such a financial disaster target our nation’s youths as specifically as the student loan crisis is. Some blame the borrowers themselves, while others say it’s corporate America’s greed that has trapped our graduates in a seemingly unending quicksand of student loan debt.

Regardless of where fault lies, our student borrowers and graduates need help.

Fortunately, the government recognizes this and they’re offering a program called the Income-Based Repayment (IBR) Plan.

The IBR plan is meant to give borrowers riddled with student loan debt a manageable repayment plan that they can afford on whatever amount of income they’re earning. If borrowers don’t make enough to adequately support themselves while repaying their student loans, the IBR plan will allow them to stop payments until they find a job that grants them an acceptable income.

Furthermore, the IBR plan allows borrowers to work towards total forgiveness of the college-related debt.

How do I Qualify for the Income-Based Repayment Plan?

In order to qualify for the IBR plan, borrowers must hold eligible student loans. Eligible types include:

  • Stafford Loans
  • PLUS Loans
  • Consolidation Loans that are made under either the Direct or FFEL programs.

Financing being paid for by parents, such as parent PLUS loans or consolidation’s being paid for by a borrower’s parents, are not eligible.

How are Payments Determined?

The IBR plan’s payments are determined by a formula that takes two factors into consideration: income and family size.

A borrower’s income compared to his or her family size is what the IBR plan used to produce a maximum monthly payment. If a borrower’s income is too low when compared to his or her family size, then that borrower can cease payments until his or her income increases.

Borrowers can refer to the chart found on the Federal Student Aid’s Income-Based Repayment Plan page to determine how the IBR plan can benefit them and their personal situation.

How does the Student Loan Forgiveness work?

The IBR plan’s forgiveness perk grants borrowers total student loan forgiveness after either 10 or 25 years of on-time payments.

The 10-year forgiveness opportunity is given to those who are public service employees. The borrower must maintain a job in the public service sector for the full 10 years of consistent repayment under the IBR plan.

The 25-year forgiveness opportunity is available to everybody else with employment in other sectors.

This program is a wonderful tool for borrowers who have found themselves weighed down by their college financing. Take advantage of this government-sponsored opportunity designed to help our college educated borrowers manage their student loan payments.