| Wednesday, July 1, 2009, will be remembered as an | | | | For low-wage earners, IBR can be a real boon. People |
| important date in the battle for student loan debt | | | | who earn $16,000 a year, for example, (or 150 percent |
| reform and student debt help. That's the day on which | | | | of the poverty level) don't have to pay more than 15 |
| the government's new Income-Based Repayment Plan | | | | percent of their income. People who earn less don't |
| (IBR) became available. Under IBR, you might be able | | | | have to make any monthly payments at all. |
| to substantially lower your monthly student loan | | | | But not everyone eligible may end up enjoying all |
| repayments - you might even be able to cut them out | | | | benefits under the program. |
| entirely! | | | | Most people, for example, probably will have paid off |
| IBR covers direct federal loans and | | | | their loans within 25 years, and so the loan forgiveness |
| federally-guaranteed student loans made through | | | | aspect won't apply to them. |
| private lenders. It does not matter, whether the loan is | | | | There is incentive to pay off the loan, too, since the |
| old or new, whether it was used for undergraduate, | | | | accruing interest could increase the cost of the loan. |
| graduate, or job-retraining studies. | | | | The faster you pay off the loan, the less expensive it |
| Under IBR, you could see your monthly payments | | | | is. |
| capped at rates realistically adjusted downward for | | | | The government's Income-Contingent Repayment Plan |
| your income. Remaining balances would be forgiven | | | | is similar to IBR, but it's less generous. It only applies to |
| after 25 years. Better still, those who go into relatively | | | | direct federal loans. It caps payments at 20 percent of |
| low-earning fields, such as public service, could enjoy | | | | income that surpass 100 percent of the poverty level. |
| student loan debt forgiveness after only 10 years. | | | | If you're in the income-contingent plan, you can apply to |
| Your income, loan size and family size help determine | | | | switch over to IBR. |
| your monthly payments under IBR. It's your lender who | | | | Unfortunately, IBR cannot be applied to Parent PLUS |
| makes the decision, but you can get an idea of what's | | | | loans, the federal loans parents take out to help pay |
| what at the IBR website, where you'll find an IBR | | | | for their children's studies. |
| calculator. | | | | |