Wednesday, May 12, 2010
Student loan payback program caps borrower payments
If you're currently repaying loads of government-backed student-loan debt, relief may be available from the Income Based Repayment (IBR) plan - one of several repayment plan options for borrowers of student loans.
Under the IBR plan the amount of a borrower's discretionary income that goes to repaying a federal loan is capped at 15%. After 25 years, any remaining principal and interest balance is forgiven--or after 10 years for borrowers with public service jobs. (wsj.com May 8, 2010)
The IBR plan is available to undergraduates and graduates with government-backed loans who meet several qualifying factors. Visit www.studentaid.ed.gov to determine whether you are likely to qualify for the IBR Plan, and to estimate your IBR monthly payment. For an official determination of your eligibility for IBR, or to apply for IBR, you should contact your loan servicer.
Eligible borrowers considering the IBR plan should carefully evaluate whether it's the best payment plan for them, as IBR may result in more interest being paid over the life of the loan than a 10-year Standard Repayment Plan.