Graduating soon with an overwhelming amount of debt? Will your salary not be enough to cover it? You might be able to qualify for the Income Based Repayment (IBR) plan. The repayment plan is a new way to make your federal student loans more manageable.
The idea behind IBR is to allow for lower monthly payments based on your income and family size. The loan payments are capped at 15% of your discretionary income. This is decreasing to 10% in July 2014. Discretionary income is defined as Adjusted Gross Income (income before taxes) minus 150% of the poverty line for your family size. You may have a payment of $0 if your income is less than 150% of the poverty line!
You must reapply every year to stay on IBR. However, if you do so for 25 years, your remaining debt and interest will be forgiven! For new borrowers starting July 2014, this time period will decrease to 20 years.
If you have a public service job, IBR has more benefits for you. You may qualify for public service loan forgiveness after only 10 years.
For more information, see www.IBRinfo.org.
Kari Christensen Peer Counselor II Powercat Financial Counseling www.k-state.edu/pfc
