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IBR 101: An Introduction to Income-Based Repayment for Student Loans
By plrprousers | September 16, 2009
IBR is a new student loan repayment program started in July of 2009. Unfortunately, students may take out too many student loans in college. However, there is no requirement that students start repaying student loans until after graduation. This can mean that the payments really pile up. After they graduate, a student may owe more than they may in their new career.
This is problematic because it keeps people below the poverty level. Children may end up suffering because their families do not have enough to live on. In addition it destroys relationships and marriages. People may never be able to rise above this debt because they are spread too thin.
The federal government developed IBR to deal with this issue. The IBR program is based around income based repayment. The program sets your student loan payments based on your income and the size of your family. This adjustment system is designed to help borrowers care for their families.
IBR represents a great opportunity. The program provides feasible repayment options. In addition, there are a number of other attractive elements in IBR. For example, you have the option of staying in the program for 25 years. You might be able to have your debt cancelled at the end of this term.
It should not surprise you that there is some paperwork involved in IBR. They program requires a yearly evaluation of your income based on the past year’s earnings. Of course your family size might also change. Your payments cannot exceed 15 percent of the amount over the poverty line that you earn. It is possible that at some point you may be below the poverty level for your family size. If this happens you pay nothing. This helps keep your debt manageable.
A lot of people are very interested in IBR. They may think that they cannot participate because they use other programs. But most programs are compatible with IBR. So you will not lose ground by switching. You can also belong in IBR and still be eligible for student loan forgiveness. You will still be able to get forgiveness based on public service if you pay though IBR.
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