What is Income Based Repayment (IBR)?
If you are current on your federal student loan payments, or if you are about to consolidate your loan or complete a rehabilitation program, you will need to elect a payment plan with your loan servicer. There are many payment plans that may be available depending on the type of loans you have and there status.
Some payment plans that may be available on elegible federal loans are: Standard Repayment Plan, Graduated Repayment Plan, Extended Repayment Plan, Income Based Repayment, Pay As You Earn, Income Contingent Repayment, and Income Sensitive Repayment.
Monthly Payments Under An Income Based Repayment Plan (IBR)
IBR determines your monthly payments according to your income and family size; therefore, any changes either of these factors, will ultimately result in an adjusted monthly payment. In comparison to some other repayment plans, and income based payment plan may provide much lower monthly payments. IBR requires a debtor to have "financial hardship" and to submit their income proof each year to be requalified for the IBR program.
Our student loan lawyers have seen over time that individuals that have comparably low income with high amounts of federal loans will likley benefit from the advanatages of IBR. Individuals with relatively higher income and/or lower total amount of outstanding federal loans may benefit from a reduced payment under a standard or graduated repayment plan.
Some Advantages of Income Based Repayment:
- Your monthly payment is determined by your income; it will be exactly 15 percent of your discretionary income.
- After being a part of IBR for 25 years, the residual balance will be eliminated.
- You may be eligible for the Public Service Loan Forgiveness Program if you are working full-time for a public service organization, while you are enrolled in IBR.
Some Disadvantages of Income Based Repayment:
- IBR cuts down your monthly payments, which will ultimately result in a longer payment period. As a result, you will be paying more interest due to the time extension that you will have acquired under this repayment plan.
- The amount that is forgiven after 25 years of repayment may require you to pay taxes on that residual balance.
Federal Loan Deferment and Forbearance
If you enduring certain circumstances such as financial hardship, or you have enrolled in school, etc. you may be qualified to pursue options such as deferment and forbearance to make your loan payments less strenuous. These two alternatives adjourn or decrease your loan payments for some time.
Student Loan Lawyers in New York City
Since every person has his own distinct set of needs, several repayment plans have been devised to suit different circumstances. Monthly payments vary and as a result, the repayment time periods vary. Sometimes, it can be difficult to understand which payment plans are available on your loans, and it can be even more difficult to decide which repayment plan may be best for you.
If you need help resolving your loan or choosing a payment plan, our student loan lawyers can help guide you in the right direction. We assist people living in New York with resolving their federal and private student loan debts. The comfort and experience of a seasoned attorney in New York City can help alleviate your anxieties and fears about dealing with your student loan debt collectors and servicer.
