The Income-based Repayment (IBR) for New Borrowers Plan helps you reduce student loan payments to no more than 10 percent of your discretionary income, and may include student loan forgiveness if you meet plan requirements.
The IBR for New Borrowers Plan expanded on the original Income-based Repayment (IBR) plan developed by President George W. Bush in 2007. Signed into law by President Barack Obama in 2015, IBR for New Borrowers offers additional benefits if you were unable to meet the original IBR deadline, including lower student loan interest and earlier student loan forgiveness.
How to Qualify for the IBR for New Borrowers Plan
Getting approved for the IBR for New Borrowers Plan means you must meet the same requirements as the original IBR Plan, with the only difference being the dates your federal student loans originated. These are loans originating on or after July 1, 2014 that include the following federal student loan types:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans made to graduate or professional students
- Direct Consolidation Loans not used to repay any PLUS loans made to your parents
- Subsidized Federal Stafford Loans from the FFEL Program
- Unsubsidized Federal Stafford Loans from the FFEL Program
- FFEL PLUS Loans made to graduate or professional students
- FFEL Consolidation Loans not used to repay any PLUS loans made to your parents
- Consolidated Federal Perkins Loans
Private loans, loans made to your parents, and federal student loans originating before this deadline are ineligible for the IBR for New Borrowers Plan.
In addition to loan type requirements, the IBR for New Borrowers Plan requires you to demonstrate a partial financial hardship in order to qualify. This is calculated by subtracting 150 percent of your state’s poverty level for your family size from your yearly Adjusted Gross Income (AGI). If the result is less than you would pay under a standard 10-year repayment plan, you could be eligible for the IBR for New Borrowers Plan after meeting other plan requirements.
Find out if you can take advantage of the IBR for New Borrowers Plan for free.
How the IBR for New Borrowers Plan Works
The IBR for New Borrowers Plan is the ideal combination of both REPAYE and IBR program benefits. The one potential drawback is your student loan’s origination date, which must be on or after July 1, 2014. However, if you meet the plan’s requirements, monthly payments for the IBR for New Borrowers Plan are capped at 10 percent of your discretionary income, and will be adjusted during an annual recertification process based on your income at that time.
An added benefit of the IBR for New Borrowers Plan is your ability to have the remainder of your student loan balance forgiven after making qualifying payments for 20 years. Yet, while this removes your obligation to pay your remaining student loan balance, it could be considered taxable income by the IRS once your student loan is forgiven.
For more details on the IBR for New Borrowers Plan, speak with an IBR specialist by phone at (800) 670-4196.