Payment Options
Income-Based Repayment:
What is income-based repayment?
The Income-Based Repayment (IBR) program is designed for borrowers who are experiencing financial difficulty, who have low income compared with their debt, and/or who are pursuing a career in public service. It does this by capping monthly payments at a percentage of the borrower's discretionary income, which is based on the borrower's income and family size, not the total amount borrowed. The monthly payment amount is adjusted annually, based on changes in annual income and family size. Most borrowers will have a monthly payment under income-based repayment that is less than 10% of their gross income.
What loans are eligible for the IBR program?
Income-based repayment is only available for federal student loans, such as the Stafford, Grad PLUS and consolidation loans. It is not available for Parent PLUS loans or for consolidation loans that include Parent PLUS loans. IBR is not available for Perkins loans, but it is available for consolidation loans that include Perkins loans. It is not available for private student loans.
How can I participate in the IBR program?
Contact your lender for more information.
Source: http://www.finaid.org/loans/ibr.phtml
Income-Sensitive Repayment:
What is income-sensitive repayment?
Income-Sensitive Repayment (ISR) is an alternative to Income-Contingent Repayment (ICR) for loans serviced by lenders in the Federal Family Education Loan Program (FFELP). ISR is designed to make it easier for borrowers with lower paying jobs to make their monthly loan payments. Borrowers must reapply for income-sensitive repayment each year. Borrowers are usually required to provide a copy of their income tax returns and/or W-2 statements every time they apply for income-sensitive repayment.
NOTE: Because income-sensitive repayment decreases the monthly payment, as compared with standard repayment, and is limited to a ten year repayment term, it increases the size of the rest of the monthly payments to compensate.
How can I participate in the ISR program?
Contact your lender for more information.
Source: http://www.finaid.org/loans/isr.phtml
Income-Contingent Repayment:
What is income-contingent repayment?
The Income-Contingent Repayment (ICR) plan is designed to make repaying education loans easier for students who intend to pursue jobs with lower salaries, such as careers in public service. It does this by tying monthly payments to the borrower's income, family size and total amount borrowed. The monthly payment amount is adjusted annually, based on changes in annual income and family size.
Income-contingent repayment is only available from the U.S. Department of Education. Private banks and lenders that offered loans through the Federal Family Educational Loan Program (FFELP) provide Income-Sensitive Repayment; however, if you have one or more FFELP loans, the Department of education will allow you to consolidate your loan(s) into a federal direct consolidation loan so you can participate in the ICR program.
NOTE: The maximum repayment period is 25 years. After 25 years, any remaining debt will be discharged (forgiven). Under current law, the amount of debt discharged is treated as taxable income, so you will have to pay income taxes 25 years from now on the amount discharged that year.
How can I participate in the ICR program?
Visit the following Web site for more information:
Source: http://www.finaid.org/loans/icr.phtml