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Student loans

What is Income-Based Repayment (IBR)?

Income-Based Repayment (IBR) is a federal student loan repayment program that allows you to limit the amount you must repay each month based on your income. Many borrowers with federal Direct Loans can now enroll in IBR online.

You get a lower payment with IBR if your federal student loan debt is high relative to your income and family size. While your loan servicer will perform the calculation to determine your eligibility, you can use the U.S. Department of Education's IBR calculator to estimate whether you would likely benefit from the IBR plan.

The IBR calculator looks at your income, family size, and state of residence to calculate your IBR monthly payment amount. If that amount is lower than the monthly payment you would be paying under the standard 10-year repayment plan, then you are eligible to repay your loans under IBR.

IBR has two key advantages, compared to other repayment plans. First, loans are forgiven after you repay for 25 years (or, in some cases, 20 years), even if your loan is not completely paid off. Second, if you have a subsidized loan and your monthly IBR payment is less than the interest that accrues, the government will pay the difference for the first three years that you are repaying through the IBR program, which means your overall balance won’t increase.

Your monthly payment adjusts annually and you must submit documentation to remain in the IBR program. The U.S. Department of Education has more information about IBR.

For some recent borrowers, the Pay as You Earn program may offer an even lower monthly payment.

 

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