If your student loan debt is high but your income is modest, you may qualify for the Income-Based Repayment Plan (IBR).

Most major types of federal student loans—except for PLUS loans for parents—are eligible for IBR.

Income-Based Plan

If you need to make lower monthly payments, this plan may be for you.

To qualify for IBR, you must have a partial financial hardship. You have a partial financial hardship if the monthly amount you would be required to pay on your IBR-eligible loans under a 10-year Standard Repayment Plan is higher than the monthly amount you would be required to repay under IBR. Your payment amount may increase or decrease each year based on your income and family size. Once you've initially qualified for IBR, you may continue to make payments under the plan even if you later no longer have a partial financial hardship. Find out whether you’re eligible.

Eligible Federal Loans

The following loans from the William D. Ford Federal Direct Loan (Direct Loan) Program and the Federal Family Education Loan (FFEL) Program are eligible for IBR:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS Loans made to graduate or professional students
  • Direct Consolidation Loans without underlying PLUS loans made to parents
  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Loans
  • FFEL PLUS Loans made to graduate or professional students
  • FFEL Consolidation Loans without underlying PLUS loans made to parents

 

Loans That Are Not Eligible

The following loans are not eligibile for repayment under IBR:

  • Any PLUS loans made to parents
  • FFEL Consolidation Loans that include underlying PLUS loans made to parents
  • Private education loans

 

Monthly Payments

Under this plan, your monthly payments are

  • based on your income and family size and capped at the 10-year standard repayment amount;
  • adjusted each year, based on changes to your annual income and family size;
  • usually lower than they are under other plans; and
  • made over a period of 25 years. 

 

Advantages of IBR

  • Pay based on what you earn—Under IBR, your monthly payment amount will be 15 percent of your discretionary income, will never be more than the amount you would be required to pay under the Standard Repayment Plan, and may be less than under other repayment plans.
  • Interest payment benefit—If your monthly IBR payment amount doesn’t cover the interest that accrues (accumulates) on your loans each month, the government will pay your unpaid accrued interest on your Direct Subsidized Loan or Subsidized Federal Stafford Loan for up to three consecutive years from the date you began repaying your loan under IBR.
  • Limitation on the capitalization of interest—While you have a partial financial hardship, interest that accrues but is not covered by your loan payments will not be capitalized, even if interest accrues during a deferment or forbearance.
  • 25-year cancellation—If you repay under IBR for 25 years and meet certain other requirements, any remaining balance will be canceled.
  • 10-year public service loan forgiveness—If, while you are employed full-time for a public service organization, you make 120 on-time, full monthly payments under IBR (or certain other repayment plans) you may be eligible to receive forgiveness of the remaining balance of your Direct Loans through the Public Service Loan Forgiveness Program.

 

Disadvantages of IBR

  • You may pay more interest—A reduced monthly payment in IBR generally means you’ll be repaying your loan for a longer period of time, so you may pay more total interest over the life of the loan than you would under other repayment plans.
  • You must submit annual documentation—To set your payment amount each year, your loan servicer, the organization that handles billing and other services for your loan, needs updated information about your income and family size. You must provide the documentation or your monthly payment amount will be reset to the amount you would be required to pay under the Standard Repayment Plan, based on the amount you owed when you began repaying under IBR. This amount will be higher than your payment under the IBR program.
  • You may have to pay taxes on the amount that is forgiven or canceled.

 

 

Calculate your estimated loan payments under this plan!

 

Tools and Resources for IBR

Want more detailed information about IBR?

  1. Download the IBR fact sheet.
  2. Browse the IBR Questions and Answers (Q&As). Q&As are grouped into six categories:
  • General Information
  • Eligible Loans
  • Determination of IBR Monthly Payment Amount
  • Married Borrowers
  • Application Process
  • Other Information