:: Income-Based Repayment ::
The Income-Based Repayment (IBR) plan is designed to make repayment easier for borrowers with high debt levels but low salaries. The plan:
- Caps the monthly payments at a percentage of a borrower's discretionary income and factor in family size and total amount borrowed.
- Adjusts the monthly payment amount each year based on changes in annual income and family size.
- Sets a maximum repayment period of 25 years. After 25 years, any remaining debt is forgiven.
Calculate your monthly payment using the Department of Education's IBR calculator.
Frequently Asked Questions about IBR
- Who do I contact if I have questions?
- What loan types are eligible?
- What loan types aren't eligible?
- What's a partial financial hardship?
- What's the definition of family size?
- What documentation must be provided?
- What if no documentation is provided?
- What are the terms of the IBR plan?
- How are IBR payments applied?
- Can I make my loan payments early?
- How is the 25-year period counted?
- What are the standard repayment levels?
- What counts as an eligible payment?
- What doesn't count as an eligible payment?
- What if I want to consolidate my loans that are in IBR?
- What happens when I no longer have a partial financial hardship?
- What are the conditions for loan forgiveness?
- When is interest capitalized?
- Can I leave IBR?
- Where can I find additional information and an IBR calculator?
Who do I contact if I have questions?
If you have any questions about the Income-Based Repayment Plan, contact your loan servicer.
What loan types are eligible?
Loans that are eligible for IBR include:
- Federal subsidized and unsubsidized Stafford
- Grad PLUS
- Supplemental Loan for Students (SLS)
- Federally Insured Student Loan (FISL)
- Auxiliary Loan for Students (ALAS)
- Consolidation loans that don't include parent PLUS loans
- Perkins Loan, Health Professional Student Loan (HPSL) and Health Education Assistance Loan (HEAL) if included in a FFELP or DL consolidation
What loan types aren't eligible?
Loans that aren't eligible for IBR include:
- Parent PLUS loans
- Consolidation loans that include a parent PLUS loan
- Private (or "alternative") student loans, state loans and other loans not guaranteed by the federal government
- Defaulted loans
What's a partial financial hardship?
A partial financial hardship (PFH) occurs when the combined yearly amount due on all of your eligible loans (calculated under a standard 10-year repayment plan) exceeds 15 percent of the difference between your adjusted gross income (AGI) and 150 percent of the poverty guideline for your family size.
PFH = standard 10-year repayment plan > 15% x [AGI – (poverty guideline for family size x 150%)]
In determining a payment amount, the AGI you’ll use depends on whether:
- You file taxes as married/joint. – Both your and your spouse's AGI are considered in determining payment amount. If both you and your spouse have IBR-eligible loans, the combined amount of your loans will be used in determining the payment amount.
- You file taxes as married/separate. – Only your AGI and IBR-eligible loans are considered in determining payment amount.
The poverty guideline income is categorized by your state of residence and family size in the guidelines published annually by the U.S. Department of Health and Human Services. If you aren't a resident of a state identified in the guidelines, your poverty line income is the income listed for the 48 contiguous states.
What's the definition of family size?
Your family size includes:
- Your spouse
- Your children (includes unborn children) if they receive more than 50 percent support from you during that year
- Other individuals who live with you and receive greater than 50 percent support from you during that year
- Medical and dental care
- Payment of college costs
What documentation must be provided?
An IBR Application PDF is available for you to complete and submit to your loan servicer(s).
If you have eligible loans held by two or more loan servicers, you must contact each loan servicer separately to request IBR. The loan servicer(s) must include all eligible loans held by them in the IBR plan, unless you request otherwise.
Each loan servicer must include the loan amounts of all eligible loans held by other lenders/servicers in the payment calculations, then prorate based on the principal amount held by that lender/servicer.
You must provide documentation of PFH eligibility to all of your loan servicers both for the initial determination of eligibility and for each subsequent year for:
- Certification of family size.
- IRS Form 4506-T PDF (Allows the IRS to disclose AGI) or a copy of the first two pages of your income tax return including a signature.
The PFH eligibility and the minimum monthly payment amount is initially evaluated and re-evaluated annually.
What if no documentation is provided?
Your loan servicer will provide you with repayment option information within the six months before your first payment is due. You have 45 days to select a repayment plan. If you select the IBR plan but don't submit documentation you'll be placed in a standard repayment plan.
If you are in the IBR plan and don't submit the required verification each year, you will be placed in a standard repayment plan.
Under the standard repayment plan, the loan is required to meet the annual $50 monthly minimum payment and $600 annual payment amount. Your repayment period is based on the recalculated payment amount and may exceed 10 years.
What are the terms of the IBR plan?
The IBR plan term can extend beyond 10 years regardless of the amount of eligible debt.
How are IBR payments applied?
IBR payments must be applied in the following order:
- Collection costs
- Late charges
- Principal balance
Can I make my loan payments early?
You may prepay all or part of a loan at any time without penalty. Forgiveness may not occur until the end of the 25-year period.
How is the 25-year period counted?
Counting begins on the date you made an eligible payment or received an economic hardship deferment before qualifying for IBR and can begin no earlier than July 1, 2009.
After 25 years, any remaining debt is forgiven. No forgiveness will be granted before July 1, 2034. Any loan amount forgiven may be taxable.
What are the standard repayment levels?
There are three types of standard repayment levels in IBR.
- Standard-Standard: The payment amount calculated is for a 10-year repayment period based on the loan balance outstanding when you initially enter repayment on the loan(s).
- Permanent-Standard: The payment amount calculated is for a 10-year repayment period based on the loan balance outstanding when you begin repayment on the loan under the IBR plan.
- Expedited-Standard: This is the payment amount calculated for the repayment period remaining when you elect to leave IBR and is based on the following loan types:
- Subsidized and unsubsidized Stafford, SLS and Grad PLUS loans (10 years)
- Consolidation Loans - number of months remaining in the original loan repayment period based on the original loan balance (10 to 30 years)
What counts as an eligible payment?
All payments made on or after July 1, 2009 could potentially be eligible if the payments fall into one of these categories:
- Partial financial hardship payments made under IBR.
- Payments made at the permanent-standard amount.
- Payments made that aren't less than the standard-standard payment amount.
- Each monthly payment that would have been due during an economic hardship deferment granted on or after July 1, 2009.
What doesn't count as an eligible payment?
The following payments don't count as eligible payments for IBR:
- Payments made while in default.
- Payments made during loan rehabilitation.
- Payments made in an amount less than the standard-standard or permanent-standard amount.
- Payments made before July 1, 2009.
What if I want to consolidate my loans that are in IBR?
If you consolidate, the 25-year period starts over. Any payments or deferments received on underlying loans prior to consolidation don't count.
What happens when I no longer have a partial financial hardship?
If at one time it was determined you had a partial financial hardship, you may remain in the IBR plan if your eligibility ceases.
What are the conditions for loan forgiveness?
- You must have qualified for a partial financial hardship IBR repayment plan at least once.
- You must have made 300 eligible payments, including months in an economic hardship deferment.
- 25 years must have elapsed.
When is interest capitalized?
Interest must be capitalized:
- When you are no longer eligible for PFH and convert to a Permanent-Standard.
- When you voluntarily leave IBR and convert to an Expedited-Standard payment plan.
Interest may be capitalized:
- When administrative forbearance is granted for a delinquency at the time of a repayment plan change.
- When a guarantor denies loan forgiveness.
Can I leave IBR?
When you choose to leave IBR completely, your repayment period will be limited to the number of months in repayment used under the IBR plan. This means that the number of months you were in IBR will count against the remaining months available in other repayment plans. Also, your payment amount may be higher than it was before entering IBR.
Where can I find additional information and an IBR calculator?
More information and a calculator to estimate payment amounts under the IBR plan are available on the U.S. Department of Education's website.