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IBR 101: An Introduction to Income-Based Repayment for Student Loans
By plrprousers | September 19, 2009
IBR is among the newest student loan repayment programs out there. Often, students will take out student loans that are too large to handle. However, there is no requirement that students start repaying student loans until after graduation. As a result, the payments can really pile up. Once a student graduates, the payments may take all of their initial career earnings.
This can keep people living below the poverty line. It can also result in children being compelled to go without. In addition it destroys relationships and marriages. It can prevent people from achieving their potential because they are spread too thin.
To deal with this issue, the federal government has recently released a program called IBR. The abbreviation IBR means income based repayment. The program sets your payments using factors like income and the size of your family. The system will help borrowers remain above water and care for their families.
IBR can help a lot of people handle their student loan debt. It provides them with an option for repayment that works. There are also other attractive elements to IBR. For example, you might remain in the program for 25 years. Your debt may be cancelled at the end of this term.
Not surprisingly there is some paperwork involved in IBR. They program requires a yearly evaluation of your income based on the past year’s earnings. Your family size might also change. However you will find that your payments cannot exceed 15 percent of the amount you make over the poverty line. Of course at some time you may be below the poverty level for your family size. Should this occur then you would pay nothing. This helps keep your debt under control.
Many people want to participate in IBR. They have concerns that they cannot participate because they are in other programs. But most programs are compatible with IBR. So it’s unlikely you would lose ground by switching over. Also, IBR does not eliminate the option for student loan forgiveness. Participating in IBR does not make you ineligible for forgiveness based on public service.
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