An Income-Based Repayment Plan is one of several repayment plans the federal government offers to help student loan borrowers pay off their student debt in a timely manner without causing financial hardship.
You can’t enroll in IBR with a private student loan.
New borrowers only have to pay 10% of their discretionary income, unless that monthly amount is greater than your payment on the standard 10-year repayment plan. You’ll pay for a maximum of 20 years, at which point your remaining loan amount will be forgiven.
For individuals who held an outstanding balance on a federal loan on or before July 1, 2014, your monthly payment would be 15% of your discretionary income, and your maximum repayment term would be 25 years.
Every year, you must recertify your income and family size to remain on an income-based repayment plan.
What is the difference between IDR and IBR? The difference between IDR plans (income-driven repayment) and IBR plans (Income-Based Repayment) is that IBR is one type of income-driven repayment available.
The four types of income-driven repayment plans are:
Income-Based Repayment Plan (IBR Plan)
Pay As You Earn Repayment Plan (PAYE Plan)
Revised Pay As You Earn Repayment Plan (REPAYE Plan)
Income-Contingent Repayment Plan (ICR Plan)
Any payment made under these income-driven plans, including IBR, counts towards the Public Service Loan Forgiveness program (PSLF). This program forgives remaining student debt after 10 qualifying years of repayment — instead of 20 or 25 years.
Most of this information is relatively fresh. Many income-driven plans haven’t been around long enough for borrowers to reach the end of their repayment terms.
Yet, the US Congress hopes to change these income-driven plans for federal student aid — aiming to alleviate common student debt issues.
How can you graduate from income-driven repayment? You can “graduate” from IDR if 10%-15% of your discretionary income exceeds the monthly amount you would pay on a standard 10-year repayment plan or if you complete 20-25 years on the repayment plan.
Check out this article on Sallie Mae & Income-Driven Repayment for answers about Sallie Mae loans.