Some college graduates find that their income doesn’t allow them to pay down their large student loan balances. A new program for federal student loan borrowers called income-based repayment can lower student loan payments and make it easier for borrowers to make ends meet.
Income-based repayment, or IBR, uses a calculation based on your income and debt to create a new payment that you should be ale to afford. The payment required changes by household size as well
Another feature of the IBR plan is that after making payments for 25 years, any outstanding debt is forgiven. That allows people whose minimum monthly payment doesn’t cover their loan interest to be able to pay off the debt before they reach retirement age.
Because student loans can’t be discharged in bankruptcy, and federal lenders won’t negotiate a debt settlement, student loans are a tricky kind of debt to manage. This new IBR program adds another alternative to those struggling with student loan debt repayment.
Public Service Loan Forgiveness
Another program for student loan debtors, Public Service Loan Forgiveness (PSLF) forgives outstanding student loan debt after 10 years of payments, so long as the debtor works in public service jobs, including nonprofit work.
Find out more about both income-based repayment and Public Service Loan Forgiveness as IBRinfo.org.